Homebuyer Budgets Flatten—Slowest Rate of Growth Since June 2020

According to new analysis from Redfin, the Seattle-based, technology-powered real estate brokerage firm, homebuyer budgets are essentially flat from last year, up only 0.3% year-over-year in for the 3-month period ending April 30, 2022. That is slowest rate of growth since June of 2020.

Declining budgets are a leading indicator that home-price growth has passed its peak and will slow in the coming months, according to Redfin. The dip, they say, is also a sign that high mortgage rates are having a major impact on how much money buyers can spend on homes, with more of their budgets going toward interest payments.

Redfin offers this example: With a 5.2% interest rate, a buyer on a $2,500 monthly budget can afford a home priced at $427,250. When rates were 3%, a buyer on the same budget could afford a $517,500 home.

In a statement prepared to accompany the report, Redfin’s Deputy Chief Economist Taylor Marr said:

“When mortgage rates go up, buyers’ budgets go down. And when buyers’ budgets go down, sellers have to meet buyers where they are. Budgets haven’t fallen from a year ago and we don’t expect home-sale prices to fall, either. But the fact that budget growth has slowed so significantly is one sign among many that home-price growth will continue to slow as the year goes on.”


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Original Source:
Redfin Reports Homebuyer Budgets Flatten, Posting Slowest Annual Growth Rate in Nearly Two Years