The median U.S. monthly housing payment fell to $2,534 during the four weeks ending September 1, the lowest level since January and down nearly $300 from April's all-time high, according to Redfin, the technology-powered real estate brokerage.
Housing payments are falling because even though home prices remain near record highs, weekly average mortgage rates have dropped to their lowest level in a year and a half.
But declining housing payments have yet to improve home sales. Pending homes sales fell 8.4% year over year, the biggest decline in nearly a year. Some would be homebuyers are on the sidelines because they’re still priced out of the market, and are waiting for mortgage rates to fall further. Redfin agents are also reporting that some buyers are waiting for more clarity on what the new NAR rules mean for real estate agent fees, and others are waiting to buy until after the presidential election.
“There is demand for desirable, move-in ready listings, but some house hunters are in a holding pattern because the industry is in flux,” said Van Welborn, a Redfin Premier agent in Phoenix. “Some buyers are waiting to see how the NAR rules shake out before they get serious. Others believe rates will come down more substantially after the Fed cuts interest rates later this month, and they’re waiting for that to happen before they buy.”
Mortgage rates may not come down much more than they already have. That’s because markets have already priced in interest-rate cuts from the Fed, starting in September and going through 2025. If the cuts are smaller and slower than expected, mortgage rates would rise from where they are today. If the Fed cuts faster than expected, mortgage rates are likely to decline further. If rates do fall substantially more than they already have, that could push up demand, competition and home prices.
There are some signals that more prospective buyers are touring homes and prepping to purchase, even if they’re not yet buying. Mortgage-purchase applications are up 3%week over week. Redfin’s Homebuyer Demand Index - a measure of tours and other buyingservices from Redfin agents - is up 4% from a month ago, and is near its highest level sinceMay.
The supply of homes for sale is increasing modestly. New listings of homes for sale are up 3.7% year over year, on par with increases over the last few months, and total listings are up 16.6%. Total supply is rising partly because some homeowners who had been locked in by their relatively low mortgage rates are selling now that rates have come down a bit. Also, sluggish homebuyer demand is causing unsold listings to pile up.
