The typical U.S. buyer’s housing payment has fallen to its lowest level in six months.
While that has led to an increase in interest from buyers, it has not led to a rise in sales, Redfin analysts said in Thursday’s report.
The typical $2,588 housing payment made by home buyers in the four weeks ending Aug. 11 was nearly $250 below April’s all-time high. It represented the smallest year-over-year increase in five years, at just 1% over August 2023.
Buyers can also rejoice over an increase in inventory, which is up nearly 20% YOY. Additionally, less than 30% of homes are selling above list price, down from 35% a year ago.
Home sales have yet to catch up with declining housing costs and inventory improvements, with pending sales down 5.1% YOY – the largest decline since November, excluding the prior four-week period (6.2%).
According to analysts, buyers aren’t biting yet for a few key reasons.
Firstly, home prices are still near record highs, despite retreating some from their July peak. Secondly, the coming presidential election has cast uncertainty over the nation’s economic climate, with little indication as to how mortgage rates and inflation will behave.
“I was hoping more buyers would emerge when mortgage rates started declining. And while house hunting has picked up a bit, the increase isn’t all that significant,” said Brynn Rea, a Redfin Premier agent in Spokane, WA. “Budgets are typically the most important factor for buyers, and homes are still really expensive for a lot of people. A lot of buyers are waiting to see if mortgage rates fall more if and when the Fed cuts interest rates, and to see what happens with the economy and the election later in the year.”
A change is in the air, as mortgage purchase applications rose 3% week over week on a seasonally adjusted basis. Redfin calculates house hunter interest by requests for tours and other home-buying services. Its Homebuyer Demand Index is down 10% YOY – the smallest decline since April.
