Redfin Reports Homebuyers’ Monthly Payments Drop to Lowest Level in Nearly a Year, Bringing Back Some House Hunters

Rhea-AI Summary

Redfin (RDFN) reports a significant decrease in the median U.S. mortgage payment, down $372 (-14%) from its October peak to its lowest level in nearly a year. Early-stage homebuying demand is on the rise, with a 10% increase in new listings year over year and a 10% increase in Redfin's Homebuyer Demand Index from a month ago to its highest level since August.

Insights

Market Research Analyst

The recent dip in the median U.S. mortgage payment signals a potential shift in the housing market dynamics, which can have a substantial effect on various sectors. Lower mortgage payments may increase consumer spending power, consequently benefiting retail and consumer goods industries. Additionally, the housing market is often seen as a leading indicator of economic health; thus, this change might suggest a more favorable economic outlook.

However, it is critical to monitor the housing inventory levels and new listings growth, as an oversupply could lead to a decrease in housing prices, negatively impacting homebuilders and real estate companies' revenues. Moreover, the financial sector, particularly banks and mortgage lenders, could experience a change in mortgage-related income.

Financial Analyst

An uptick in early-stage homebuying demand, as evidenced by the increase in Redfin's Homebuyer Demand Index, could be a precursor to a recovery in the real estate sector. This recovery could positively influence the stocks of homebuilders, real estate agencies and mortgage lenders. Furthermore, the stabilization of pending sales decline is a positive sign for the industry, indicating that the downward trend may be slowing.

Investors should consider the potential for increased transaction volumes and their impact on the revenues of companies operating within the housing market. It is also important to analyze the long-term interest rate forecasts, as they significantly affect mortgage rates and, consequently, the real estate market.

Economist

The decrease in the median U.S. mortgage payment reflects the interplay between interest rates and the housing market. Lower mortgage payments can lead to increased disposable income, which could stimulate economic growth. However, it is important to consider the Federal Reserve's monetary policy stance, as changes in interest rates can swiftly alter the affordability of housing and influence buyer demand.

One should also examine the broader macroeconomic implications, such as the potential for inflationary pressures if demand outpaces supply. The real estate market's health is a composite indicator of consumer confidence, employment levels and overall economic activity and thus, these factors must be taken into account when assessing the long-term implications of the current trend.

The median U.S. housing payment is down nearly $400 from its October peak, enticing some sidelined buyers to get back in the game

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) —The median U.S. mortgage payment was $2,361 during the four weeks ending December 31, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s down $372 (-14%) from October’s all-time high to its lowest level in nearly a year.

Early-stage homebuying demand is starting to pick up as buyers take advantage of lower rates and more homes to choose from (new listings are up 10% year over year). Redfin’s Homebuyer Demand Index—a seasonally adjusted measure of requests for tours and other homebuying services from Redfin agents—is up 10% from a month ago to its highest level since August. Pending sales are down just 3% annually, the smallest decline in two years.

“There have been more tours and more offers on my listings since mortgage rates started declining,” said Las Vegas Redfin Premier agent Shay Stein. “It’s all about perspective: Two years ago, buyers would have cried about a 6% mortgage rate. Now, they’re happy they’ve dropped down to the mid-6’s.”

Leading indicators

Indicators of homebuying demand and activity
	Value (if applicable)	Recent change	Year-over-year change	Source
Daily average 30-year fixed mortgage rate	6.7% (Jan. 3)	Up from 6.61% a week earlier	Up from 6.45%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.61% (week ending Dec. 28)	Lowest level since May	Up from 6.42%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Down 5% from two weeks earlier; down 3% from a month earlier (as of week ending Dec. 29)	Down 12%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Highest level since August; Up 10% from a month earlier (as of the week ending Dec. 31)	Down 6%	Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents
Google searches for “home for sale”		Up 3% from a month earlier (as of Dec. 30)	Down 20%	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending December 31, 2023 Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.
	Four weeks ending December 31, 2023	Year-over-year change	Notes
Median sale price	$363,371	4.4%	Biggest increase since October 2022
Median asking price	$359,236	4.3%
Median monthly mortgage payment	$2,361 at a 6.61% mortgage rate	5.4%	Down $372 (-14%) from all-time high set during the four weeks ending Oct. 22. Lowest level since Feb.
Pending sales	52,552	-3.3%	Smallest decline since January 2022
New listings	44,297	9.5%
Active listings	789,516	-3.9%	Smallest decline since June
Months of supply	3.8 months	+0.3 pts.	4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions
Share of homes off market in two weeks	26.5%	Up from 25%
Median days on market	41	-2 days
Share of homes sold above list price	24.2%	Up from 23%
Share of homes with a price drop	3.9%	+0.5 pts.
Average sale-to-list price ratio	98.4%	+0.5 pts.

Metro-level highlights: Four weeks ending December 31, 2023 Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.
	Metros with biggest year-over-year increases	Metros with biggest year-over-year decreases	Notes
Median sale price	Newark, NJ (18.2%) Anaheim, CA (18.1%) West Palm Beach, FL (15.2%) Fort Lauderdale, FL (15.1%) Miami (11.7%)	Fort Worth, TX (-3.1%) Austin, TX (-1.7%) San Francisco (-1.1%) Denver (-0.4%)	Declined in 4 metros
Pending sales	Dallas (11.3%) Milwaukee (9.3%) Cleveland, OH (6.3%) San Jose, CA (5.6%) Chicago (5.6%)	Providence, RI (-15.4%) New Brunswick, NJ (-13.6%) Newark, NJ (-12.5%) New York (-10.8%) Atlanta (-10%)	Increased in 13 metros
New listings	Phoenix (23.5%) Montgomery County, PA (21.9%) Austin, TX (20.9%) San Antonio, TX (18.3%) Dallas (16.4%)	San Francisco (-35.3%) Atlanta (-11.5%) Providence, RI (-9.8%) Indianapolis, IN (-6.9%) Warren, MI (-5.6%)	Declined in 11 metros

To view the full report, including charts, please visit:
https://www.redfin.com/news/housing-market-update-monthly-payments-drop

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240104481150/en/

Redfin Journalist Services:

Kenneth Applewhaite, 206-414-8880

press@redfin.com

Source: Redfin

FAQ

What is the median U.S. mortgage payment according to Redfin's report?

The median U.S. mortgage payment was $2,361 during the four weeks ending December 31, down $372 (-14%) from October's all-time high.

How is homebuying demand changing according to Redfin's report?

Early-stage homebuying demand is increasing, with new listings up 10% year over year and Redfin's Homebuyer Demand Index up 10% from a month ago to its highest level since August.

What is the change in pending sales according to Redfin's report?

Pending sales are down just 3% annually, the smallest decline in two years.

What are real estate agents saying about the current market according to Redfin's report?

Real estate agents are seeing more tours and offers on listings since mortgage rates started declining.

How are lower mortgage rates impacting the market according to Redfin's report?

Lower mortgage rates are enticing sidelined buyers to get back in the game.

What is Redfin's ticker symbol?

Redfin's ticker symbol is RDFN.