Redfin Reports U.S. Home Prices Hit Another Record High, But Mortgage Rates Are Starting to Decline—Which Could Give Buyers Relief

Rhea-AI Summary

Redfin reports that U.S. home prices have reached a record high with a median home-sale price of $394,000, marking a 4.4% year-over-year increase as of June 9. Despite this, there are signs that price growth may ease as asking prices level off and 6.5% of home sellers are reducing their asking prices. Mortgage rates have dipped to their lowest in three months at 6.99%, which could relieve buyers by lowering monthly housing payments. However, high costs are still deterring some buyers, with pending home sales down 3.5% year over year and Redfin's Homebuyer Demand Index down 18%. New listings have increased by 7.8% but remain below typical spring levels.

Positive

• U.S. median home-sale price hit an all-time high of $394,000, a 4.4% year-over-year increase.
• Mortgage rates have declined to 6.99%, their lowest level in three months, potentially offering relief to buyers.
• Median monthly housing payments decreased slightly to $2,829.
• New listings have increased by 7.8% year over year.
• Mortgage-purchase applications increased by 9% week over week.
• Touring activity is up 28% from the start of the year.

Negative

• Pending home sales are down 3.5% year over year, the largest decline in three months.
• Redfin's Homebuyer Demand Index is down 18% and at its lowest level since February.
• High housing costs are keeping some prospective buyers on the sidelines.
• Active listings are up 16.7% year over year.
• The share of homes sold above list price decreased to 32.1% from 35%.
• The average sale-to-list price ratio dropped to 99.6%.
• Median days on market increased by 3 days.

Insights

Financial Analyst

Redfin's report indicates a record-high median home-sale price of $394,000, a 4.4% increase year over year. This rise, while significant, comes with mixed signals. On one hand, cooling inflation and lower mortgage rates are providing some relief to buyers, potentially stimulating demand. However, the report also highlights a decline in pending home sales by 3.5% and an 18% drop in homebuyer demand according to Redfin's Homebuyer Demand Index. This indicates that high prices are still a major deterrent for buyers.

From an investment perspective, this environment creates a volatile market for real estate companies and investors. Lower mortgage rates may boost short-term demand, but sustained high prices and declining sales numbers could limit growth in the longer term. Investors should watch for further adjustments in mortgage rates and inflation data, as these will significantly impact housing market dynamics.

Market Research Analyst

New listings are up 7.8% year over year but remain below typical spring levels. This limited supply combined with dropping mortgage rates could maintain upward pressure on home prices despite the current demand slump. Interestingly, prices are already declining in markets like Austin, Fort Worth, San Antonio and Portland. This divergence suggests a regional disparity in market conditions.

For retail investors, this holistic view of the market highlights the importance of diversification. Investing in real estate across multiple regions can help mitigate risks associated with localized market downturns. Additionally, monitoring regions where prices are dropping might offer buying opportunities for long-term investments, especially if mortgage rates continue to decline.

Daily average mortgage rates dropped to their lowest level in three months on Wednesday, after the May CPI report showed that inflation is continuing to cool. That could bring back some demand; for now, home sales are still declining.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The median U.S. home-sale price hit an all-time high of $394,000 during the four weeks ending June 9, up 4.4% year over year—the biggest increase in about three months. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

There are signs that home-price growth could ease soon. Asking prices have leveled off, and 6.5% of home sellers are cutting their asking price, on average, the highest share since November 2022. Prices are already declining in four U.S. metros: Austin, TX, Fort Worth, TX, San Antonio, TX and Portland, OR.

Meanwhile, the typical homebuyer’s monthly housing payment dipped to $2,829, which is $30 below April’s record high. Median housing payments have fallen slightly since April despite record sale prices because weekly average mortgage rates have declined to 6.99%.

Mortgage rates are likely to decline further over the summer, which would keep monthly housing costs from spiraling up again. Daily average mortgage rates dropped to their lowest level in three months on June 12 after the latest CPI report showed that inflation is continuing to cool. And although the Fed forecast just one interest-rate cut this year at its June 12 meeting, it’s possible the Fed wasn’t able to fully consider the fresh inflation data in time for the meeting; they may revise their projection at the next meeting. (It’s worth noting that daily rates have been volatile for the last several days; they soared after last Friday’s hot jobs report before dropping back down.)

“The latest inflation report is good for homebuyers because it has already sent mortgage rates down, though this week’s Fed meeting will temper mortgage-rate declines,” said Chen Zhao, Redfin’s economic research lead. “But on the other side of the coin, if lower mortgage rates bring back more demand than supply, that could erase the possibility that home-price growth softens, and push prices up even further. Lower rates and higher prices may ultimately cancel each other out when it comes to homebuyers’ monthly payments.”

For now, high costs are keeping some prospective homebuyers on the sidelines. Pending home sales are down 3.5% year over year, the biggest decline in three months, and Redfin’s Homebuyer Demand Index—a measure of requests for tours and other buying services from Redfin agents—is down 18%, sitting at its lowest level since February. But there is one encouraging sign for demand: Mortgage-purchase applications are up 9% week over week. On the selling side, new listings are up 7.8% year over year, but they’re below typical springtime levels, which is why home prices keep rising despite tepid demand.

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

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	6.98% (June 12)	Up from 7.03% a week earlier, but down from a 5-month high of 7.52% 5 weeks earlier	Up from 6.94%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.99% (week ending June 6)	Down slightly from 7.03% a week earlier; down from a 5-month high of 7.22% a month earlier	Up from 6.71%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Increased 9% from a week earlier (as of week ending June 7)	Down 12%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Down 2% from a month earlier (as of week ending June 9)	Down 18%	Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents
Touring activity		Up 28% from the start of the year (as of June 9)	At this time last year, it was up 22% from the start of 2023	ShowingTime, a home touring technology company
Google searches for “home for sale”		Unchanged from a month earlier (as of June 10)	Down 16%	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending June 9, 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 June 9, 2024	Year-over-year change	Notes
Median sale price	$393,627	4.4%	All-time high; biggest increase in about 3 months (tied with increase during 4 weeks ending April 21)
Median asking price	$417,475	6%
Median monthly mortgage payment	$2,829 at a 6.99% mortgage rate	8.6%	$30 below all-time high set during the 4 weeks ending April 28
Pending sales	86,604	-3.5%	Biggest decline in 3 months
New listings	100,411	7.8%
Active listings	939,839	16.7%
Months of supply	3.2	+0.6 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	42.4%	Down from 48%
Median days on market	31	+3 days
Share of homes sold above list price	32.1%	Down from 35%
Share of homes with a price drop	6.5%	+2 pts.	Highest level since Nov. 2022
Average sale-to-list price ratio	99.6%	-0.3 pts.

Metro-level highlights: Four weeks ending June 9, 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	Anaheim, CA (16.8%) Newark, NJ (16.4%) New Brunswick, NJ (15.5%) Nassau County, NY (14.6%) San Jose, CA (13%)	Austin, TX (-3.5%) Fort Worth, TX (-2.5%) San Antonio (-1.1%) Portland, OR (-0.9%)	Declined in 4 metros
Pending sales	San Jose, CA (12.2%) Columbus, OH (5.8%) Pittsburgh (5.4%) Milwaukee (4%) Seattle (3.6%)	Houston (-16.2%) West Palm Beach, FL (-13.4%) Fort Lauderdale, FL (-11.5%) Atlanta (-10%) Tampa, FL (-9.9%)	Increased in 13 metros
New listings	San Jose, CA (39.9%) Phoenix (26.1%) San Diego (23.2%) Miami (20.9%) Denver (17.7%)	Atlanta (-7.9%) Chicago (-5.1%) Newark, NJ (-3.2%) Indianapolis (-2.8%) Minneapolis (-2.1%)	Declined in 7 metros

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-home-prices-record-high-mortgage-rates-decline

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/20240613204122/en/

Redfin Journalist Services:

Kenneth Applewhaite

press@redfin.com

Source: Redfin

FAQ

What is the current median U.S. home-sale price?

As of June 9, the median U.S. home-sale price is $394,000, a record high.

How have mortgage rates changed recently?

Mortgage rates have declined to 6.99%, their lowest level in three months.

What effect might declining mortgage rates have on buyers?

Declining mortgage rates may provide relief to buyers by reducing monthly housing payments.

How are pending home sales performing?

Pending home sales are down 3.5% year over year, the largest decline in three months.

What is the status of Redfin's Homebuyer Demand Index?

Redfin's Homebuyer Demand Index is down 18% and at its lowest level since February.

How have new home listings changed year over year?

New home listings have increased by 7.8% year over year.