Redfin Reports Housing Payments Have Dropped to Their Lowest Level Since January. But Home Sales Are Still Falling.

Rhea-AI Summary

Redfin reports that the median U.S. monthly housing payment has fallen to $2,534, the lowest since January, due to declining mortgage rates. Despite this, pending home sales dropped 8.4% year-over-year, the largest decline in nearly a year. Some buyers are waiting for further rate drops or clarity on new NAR rules before purchasing.

Key points:

• Mortgage rates at lowest level in 1.5 years
• Mortgage-purchase applications up 3% week-over-week
• Redfin's Homebuyer Demand Index up 4% from a month ago
• New listings up 3.7% year-over-year
• Total listings up 16.6% year-over-year

The market shows signs of increased buyer interest, but many remain cautious due to industry changes and economic uncertainty.

Positive

• Median U.S. monthly housing payment decreased to $2,534, lowest since January
• Mortgage rates dropped to lowest level in 1.5 years
• Mortgage-purchase applications increased 3% week-over-week
• Redfin's Homebuyer Demand Index up 4% from a month ago
• New listings increased 3.7% year-over-year
• Total listings up 16.6% year-over-year

Negative

• Pending home sales fell 8.4% year-over-year, biggest decline in nearly a year
• Some buyers remain on the sidelines due to high prices and industry uncertainty
• Potential for mortgage rates to rise if Fed rate cuts are smaller or slower than expected

Insights

Financial Analyst

The decline in median U.S. monthly housing payments to $2,534 is a significant development, potentially making homeownership more accessible. However, the 8.4% year-over-year drop in pending home sales indicates persistent market challenges. The disparity between falling payments and declining sales suggests complex market dynamics, including buyer expectations of further rate drops and uncertainty surrounding new NAR rules.

The 3.7% increase in new listings and 16.6% rise in total listings point to improving supply conditions. This could help balance the market, but may also indicate some homeowners are selling due to financial pressures. The 3.9% year-over-year increase in median sale price to $389,500 shows continued price resilience despite market headwinds.

Investors should monitor how these trends evolve, particularly if mortgage rates continue to decline, potentially stimulating demand and price growth.

Real Estate Market Analyst

The housing market is showing mixed signals. While lower monthly payments should theoretically boost demand, the wait-and-see approach adopted by many buyers is creating a disconnect. The 4% increase in Redfin's Homebuyer Demand Index suggests growing interest, but this hasn't translated into sales yet.

Regional variations are notable, with Philadelphia seeing an 11.9% year-over-year increase in median sale price, while Austin experienced a 4.5% decrease. This highlights the importance of local market factors in real estate investment decisions.

The increase in months of supply to 3.6 indicates a shift towards a more balanced market, but it's still below the 4-5 months considered fully balanced. Investors should watch for potential opportunities in markets with increasing supply and stable or rising prices.

Economic Forecaster

The housing market's current state reflects broader economic uncertainties. The anticipation of Fed rate cuts has already been priced into mortgage rates, explaining their recent decline. However, if these cuts are smaller or slower than expected, we could see mortgage rates rise again, potentially dampening demand further.

The 6% increase in Google searches for "home for sale" suggests latent demand, which could materialize if economic conditions improve or stabilize. The upcoming presidential election adds another layer of uncertainty, potentially delaying major purchase decisions.

Investors should consider the potential for a surge in demand and prices if rates fall substantially, but also be prepared for continued market sluggishness if economic uncertainties persist. The housing market's performance in the coming months could be a key indicator of overall economic health and consumer confidence.

Pending home sales are falling despite declining housing payments because some homebuyers are hoping mortgage rates fall further before they make a move, and others are waiting for clarity on the new NAR rules

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — 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 a new report from Redfin (redfin.com), 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 buying services from Redfin agents–is up 4% from a month ago, and is near its highest level since May.

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.

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page.

Indicators of homebuying demand and activity
	Value (if applicable)	Recent change	Year-over-year change	Source
Daily average 30-year fixed mortgage rate	6.38% (Sept. 4)	Near lowest level since spring 2023	Down from 7.06%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.35% (week ending Aug. 29)	Lowest level since May 2023	Down from 7.18%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Increased 3% from a week earlier (as of week ending Aug. 30)	Down 4%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Up 4% from a month earlier; near highest level since May (as of week ending Sept. 1)	Down 7%	Redfin Homebuyer Demand Index a measure of tours and other homebuying services from Redfin agents
Touring activity		Down 4% from the start of the year (as of Sept 3) (Down mostly due to Labor Day)	At this time last year, it was down 4% from the start of 2023	ShowingTime, a home touring technology company
Google searches for “home for sale”		Up 6% from a month earlier (as of Aug. 26)	unchanged	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending Sept. 1, 2024 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 Sept. 1, 2024	Year-over-year change	Notes
Median sale price	$389,500	3.9%	About $5,000 below all-time high set during the 4 weeks ending July 7
Median asking price	$393,700	5.3%
Median monthly mortgage payment	$2,534 at a 6.35% mortgage rate	-1%	Lowest level since January; $291 below all-time high set during the 4 weeks ending April 28
Pending sales	78,666	-8.4%	Biggest decline since Oct. 2023
New listings	87,132	3.7%
Active listings	993,565	16.6%	Smallest increase since April
Months of supply	3.6	+0.8 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	35.3%	Down from 39%
Median days on market	36	+6 days
Share of homes sold above list price	28.1%	Down from 33%
Share of homes with a price drop	6.6%	+1.3 pts.
Average sale-to-list price ratio	99.1%	-0.5 pts.

Metro-level highlights: Four weeks ending Sept. 1, 2024 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	Philadelphia (11.9%) Milwaukee (11.4%) Nassau County, NY (10.1%) Providence, RI (8.8%) Newark, NJ (7.8%)	Austin, TX (-4.5%) Fort Worth, TX (-1.7%) San Francisco, CA (-1.2%) Tampa, FL (-1.1%) San Antonio (-1%) Oakland, CA (-0.9%) Houston (-0.3%)	Declined in 7 metros
Pending sales	San Francisco (7.1%) Boston (6%) San Jose, CA (4%) Los Angeles (3.9%) Riverside, CA (3.5%)	Miami (-17.4%) West Palm Beach, FL (-17%) Fort Lauderdale, FL (-16.9%) Atlanta (-15.1%) Houston (-12.8%)	Increased in 16 metros
New listings	San Diego (17.4%) Las Vegas (15.4%) Phoenix (14.2%) Anaheim, CA (13.8%) Houston (12%)	Atlanta (-15.6%) San Antonio (-13.4%) Newark, NJ (-10.7%) Austin, TX (-10.6%) Chicago (-6.7%)	Declined in 13 metros

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

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 run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

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/20240905109222/en/

Contact Redfin

Redfin Journalist Services:

Tana Kelley

press@redfin.com

Source: Redfin

FAQ

What is the current median U.S. monthly housing payment according to Redfin (RDFN)?

According to Redfin's report, the current median U.S. monthly housing payment is $2,534, which is the lowest level since January.

How have pending home sales changed year-over-year as reported by Redfin (RDFN)?

Redfin reports that pending home sales fell 8.4% year-over-year, which is the biggest decline in nearly a year.

What factors are causing some homebuyers to delay purchases according to Redfin's (RDFN) report?

According to Redfin, some homebuyers are delaying purchases due to expectations of further mortgage rate declines, waiting for clarity on new NAR rules, and anticipating the outcome of the presidential election.

How has Redfin's (RDFN) Homebuyer Demand Index changed recently?

Redfin's Homebuyer Demand Index is up 4% from a month ago and is near its highest level since May, indicating increased buyer interest.