The cost of a typical U.S. home inched up 2.6% during the past four weeks to $382.000, according to a housing market update from Redfin.
This is the most significant increase since November 2022. Meanwhile, the typical monthly mortgage payment declined to $2,599, a $55 decrease from the all-time high in early July.
Redfin's Homebuyer Demand Index, which measures requests for tours and other home-buying services, fell by 3% from a year ago, with mortgage purchase applications also down by approximately 23%.
The drop in inventory has outpaced the decrease in demand as homeowners hold onto their homes to take advantage of relatively low mortgage rates, thereby driving up prices. The market has seen a 22% fall in new listings compared to a year ago, and the overall quantity of homes available for purchase has dipped by 17% - the most significant drop in 18 months. The 15% decline in pending sales is, in part, a consequence of this inventory shortage which is restricting the options available to potential buyers.
Redfin's Economic Research Lead Chen Zhao mentioned that the Fed's recent news of no longer predicting a broad economic recession and a probable soft landing is positive for the housing market.
That’s despite the face that today’s housing market is unusual because prices are increasing despite lukewarm demand.
Meanwhile, leading indicators of home buying activity show a mixed picture. The average 30-year fixed mortgage rate was 6.95% on July 26, slightly up from the previous week, while purchase applications were down 3% from the previous week and 23% from a year earlier.
Google searches for "homes for sale" remained essentially flat from a month ago, but home showing activity was up by 11% from the start of the year.
Data also reveal regional variations. Home sale prices increased most in Miami, Milwaukee, Cincinnati, Anaheim, Calif., and West Palm Beach, Fla., while prices declined in Austin, Texas, Detroit, Phoenix, Las Vegas, and Sacramento. New listings fell in all metros analyzed, with the most significant drops in Las Vegas, Phoenix, Newark, N.J., Providence, R.I., and New Brunswick, N.J.
This data is a snapshot of the current state of the U.S. housing market, with increasing prices despite lukewarm demand, providing insight into the potential direction of the market in the coming months.
