Redfin Reports Housing Payments Post Biggest Decline in 4 Years Ahead of Fed's Historic Rate Cut, Which Could Lure Buyers Off the Sidelines

Rhea-AI Summary

Redfin reports that U.S. housing payments have declined 2.7% year-over-year, marking the largest drop since May 2020. The median monthly payment is now $2,534, nearly $300 below April's peak. This improvement in affordability comes as mortgage rates hit a 20-month low ahead of the Fed's first interest rate cut since 2020.

Despite lower payments and a 5.1% increase in new listings, pending home sales are down 6.9% year-over-year. Buyers seem to be waiting for further rate drops, clarity on new NAR rules, and the outcome of the upcoming election. The market now has about four months of supply, up from three months last year, indicating a shift towards a more buyer-friendly market.

Positive

• Median U.S. housing payment decreased 2.7% year-over-year to $2,534
• Mortgage rates dropped to their lowest level in 20 months
• New listings increased by 5.1% year-over-year
• Total number of homes for sale up 16.1% year-over-year
• Months of supply increased to 4 months, indicating a more balanced market

Negative

• Pending home sales down 6.9% year-over-year
• Median sale price increased 3.4% year-over-year to $385,375
• Share of homes sold above list price decreased to 27.5% from 32% last year
• Median days on market increased by 6 days compared to last year

Insights

Financial Analyst

The decline in median U.S. housing payments by 2.7% year-over-year marks a significant shift in the housing market dynamics. This $300 drop from April's peak, coupled with mortgage rates at a 20-month low, could potentially stimulate buyer activity. However, the 6.9% year-over-year decrease in pending home sales suggests a lag in buyer response.

The 5.1% increase in new listings and 16.1% rise in total homes for sale indicate a growing inventory, which could pressure prices. The market's 4 months of supply suggests a shift towards a more balanced market, potentially favoring buyers. The 3.4% year-over-year increase in median sale price to $385,375 shows continued price growth, albeit at a slower pace.

Investors should monitor how the Fed's rate cut impacts mortgage rates and buyer behavior in the coming months. The potential for increased winter activity, contrary to seasonal norms, could present unique opportunities in the real estate sector.

Market Research Analyst

The housing market is showing signs of a potential shift, with improving affordability yet lagging sales. The 5% week-over-week increase in mortgage applications suggests growing interest, but buyers seem hesitant due to various factors including political uncertainty and confusion over new NAR rules.

Regional disparities are notable, with Newark, NJ seeing an 11.8% year-over-year increase in median sale price, while Austin, TX experienced a 4.8% decrease. This highlights the importance of local market analysis for investors.

The 8% decrease in Google searches for "home for sale" indicates waning online interest, which could be a leading indicator of future market activity. However, the 8% increase in touring activity from the start of the year suggests that serious buyers are still actively exploring options.

Investors should closely monitor these trends, as they may signal a potential market inflection point, especially if buyer activity picks up in response to falling mortgage rates and increased inventory.

Real Estate Expert

The housing market is at a critical juncture, with improving affordability not yet translating into increased sales. The 2.7% year-over-year decline in median housing payments, the largest since May 2020, is a significant development that could potentially reignite buyer interest.

The increase in inventory, with new listings up 5.1% and total homes for sale up 16.1%, is creating a more balanced market. However, the 6.9% year-over-year drop in pending sales indicates persistent buyer hesitation.

The divergence between rising mortgage applications (5% week-over-week) and declining pending sales suggests a 'wait-and-see' approach from buyers. This could lead to pent-up demand being released once there's more certainty about interest rates and the political landscape.

The unusual expectation of a busier winter market could disrupt traditional seasonal patterns, presenting both opportunities and challenges for buyers, sellers and investors in the coming months.

Monthly housing payments have declined nearly $300 from April’s all-time high. Improving affordability has yet to push up pending sales, but that could change after the Fed cut interest rates for the first time since 2020 this week.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The median U.S. housing payment was $2,534 during the four weeks ending September 15, down 2.7% from a year earlier–the biggest decline since May 2020, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Monthly payments are falling because mortgage rates dropped to their lowest level in 20 months in the lead-up to the Fed’s first interest-rate cut since 2020.

Mortgage applications are rising, but pending sales have yet to improve. Mortgage-purchase applications are up 5% week over week, with some buyers jumping off the sidelines as mortgage rates fall. But many would-be buyers are still holding off, with pending home sales down 6.9% year over year, one of the biggest declines since October 2023. That’s despite both lower housing payments and more homes to choose from: New listings are up 5.1% year over year, and the total number of homes for sale is up 16.1%.

There are several reasons sales haven’t yet picked up. Home prices are still rising, and Redfin agents report that some would-be buyers are waiting for mortgage rates to fall more, while other prospective buyers aren’t even aware that rates have started to fall. Aside from rate-related reasons, agents report many house hunters are confused about the new NAR rules and others are waiting until after the election.

“Buyers are holding their breath, watching interest rates. There’s pent-up energy, with people waiting for the right moment to buy a home–and it’s feeling like the dam is going to break soon,” said Kristin Sanchez, a Redfin Premier agent in Nashville, TN. “Once things are more settled and people know where mortgage rates are going to land and who is going to be president, the market is going to get busier. I think winter will be busier than summer, which is the opposite of a usual year.”

Inventory is piling up. The combination of rising inventory and slow sales is causing for-sale homes to pile up, and many listings are growing stale. There are roughly four months of supply available on the market, the most since February and up from just over three months last year. Months of supply is the length of time it would take for the existing supply of homes to be bought up at the current pace of sales; the higher the number, the more buyer-friendly the market.

Fed’s interest-rate cut may bring buyers off the sidelines. Demand may improve after yesterday’s interest-rate cut, with house hunters who had been waiting for the Fed to lower rates jumping into the market now that it has happened. Redfin economists note that mortgage rates are unlikely to fall much further in the next few weeks because markets had already priced in expectations of an aggressive rate cut, and the Fed is projecting only gradual cuts from here on out. But mortgage rates may swing up or down before the end of the year, depending on upcoming inflation and jobs reports.

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	6.15% (Sept. 18)	Near lowest level since February 2023	Down from 7.33%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.2% (week ending Sept. 12)	Lowest level since February 2023	Down from 7.18%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Increased 5% from a week earlier (as of week ending Sept. 13)	Down 0.4%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Essentially unchanged from a month earlier (as of week ending Sept. 15)	Down 7%	Redfin Homebuyer Demand Index a measure of tours and other homebuying services from Redfin agents
Touring activity		Up 8% from the start of the year (as of Sept. 16)	At this time last year, it was down 3% from the start of 2023	ShowingTime, a home touring technology company
Google searches for “home for sale”		Down 8% from a month earlier (as of Sept. 16)	Down 16%	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending Sept. 15, 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. 15, 2024	Year-over-year change	Notes
Median sale price	$385,375	3.4%
Median asking price	$398,475	5.4%
Median monthly mortgage payment	$2,534 at a 6.2% mortgage rate	-2.7%	Biggest decline since May 2020   Nearly $300 below April’s all-time high
Pending sales	75,933	-6.9%
New listings	88,196	5.1%
Active listings	998,854	16.1%	Smallest increase since April
Months of supply	3.9	+0.8 pts.	Highest level since February   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	34.4%	Down from 38%
Median days on market	37	+6 days
Share of homes sold above list price	27.5%	Down from 32%
Average sale-to-list price ratio	99%	-0.4 pts.

Metro-level highlights: Four weeks ending Sept. 15, 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	Newark, NJ (11.8%) Milwaukee (10.2%) Providence, RI (10.1%) Nassau County, NY (8.7%) Warren, MI (7.9%)	Austin, TX (-4.8%) Oakland, CA (-3.1%) San Antonio(-2.5%) Dallas (-2.3%) Tampa, FL (-1.5%)	Declined in 9 metros
Pending sales	San Antonio (7.6%) San Jose, CA (6.7%) Phoenix (5.9%) San Diego (4.2%) Cleveland (3.6%)	West Palm Beach, FL (-20%) Miami (-19.2%) New Brunswick, NJ (-14.9%) Fort Lauderdale, FL (-14.7%) Atlanta (-14.2%)	Increased in 15 metros
New listings	Las Vegas (18.3%) Phoenix (18.2%) San Jose, CA (17.1%) New York (14.9%) Anaheim, CA (14.4%)	San Antonio (-20.7%) Atlanta (-16%) Austin, TX (-11.5%) San Francisco (-8.7%) Chicago (-4.7%)	Declined in 12 metros

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

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/20240919958324/en/

Redfin Journalist Services:

Tana Kelley

press@redfin.com

Source: Redfin

FAQ

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

According to Redfin's report, the current median U.S. housing payment is $2,534 for the four weeks ending September 15, 2024.

How much have pending home sales declined year-over-year for Redfin (RDFN)?

Redfin (RDFN) reports that pending home sales have declined 6.9% year-over-year for the four weeks ending September 15, 2024.

What is the current months of supply in the housing market as reported by Redfin (RDFN)?

Redfin (RDFN) reports that there are approximately four months of supply available in the housing market, up from just over three months last year.

How has the median sale price changed year-over-year according to Redfin's (RDFN) data?

According to Redfin's (RDFN) data, the median sale price has increased 3.4% year-over-year to $385,375 for the four weeks ending September 15, 2024.