The median U.S. monthly mortgage payment was $2,587 during the four weeks ending August 18, its lowest level since February and down 0.1% from a year earlier, per a new report from Redfin.
Albeit a small drop, the level marks the first time in four years that monthly payments have posted any decline at all. Housing payments are falling because mortgage rates are falling; weekly average mortgage rates are sitting at a 15-month low of just below 6.5%, down from a peak of 7.2% in May.
Despite home prices still near record highs, up 3.6% year over year, the stabilization of rates well below their peak has inspired house hunters to hit the pavement: Redfin’s Homebuyer Demand Index — a measure of requests for tours and other buying services from Redfin agents — has risen 4% over the last week to its highest level in two months.
The uptick in home tours hasn’t yet translated to more sales, Redfin reports. Pending home sales are down 5.3% year over year, the biggest decline in nine months (with the exception of the four weeks ending August 4), and mortgage-purchase applications are down 8%. But pending sales are a lagging indicator, and they may improve as home tours pick up, and Redfin agents report they’ve seen an uptick in buyer interest.
“Over the last two weeks, I’ve seen momentum build and I’ve felt clients get more excited about the prospect of buying or selling a home,” said Gregory Eubanks, a Redfin Premier agent in Los Angeles. “That stems from encouraging economic news and speculation that the Fed is going to cut interest rates in September. Some people are actively searching and listing their homes right now, and others are still hoping rates drop more significantly before making a move.”
On the supply side, new listings are up 3.4% year over year and the total number of homes for sale is up 18%. Redfin economists say there is a chance listings could rise in the coming weeks, with the August 17 implementation of the NAR settlement inspiring some sellers to list their homes, in hopes of a lower fee.
