Increased Listings of Homes For Sale and Lower Mortgage Rates Provide Buyers With New Hope

Redfin reported on Friday that according to its latest data, a US homebuyer on a $3,000 monthly budget can afford a $447,750 home with a 6.85% mortgage rate, the daily average as of July 11th.

Mortgage rates dropped to their lowest level since March on Thursday’s inflation report, and the supply of homes for sale is rising, giving buyers a sweet spot before competition picks up, Redfin said. Last Thursday’s rate adjustment means buyers gained $22,500 in purchasing power since mortgage rates hit a five-month peak in April, when they could have bought a $425,500 home with an average rate of 7.5%.

Redfin also points out that increasing inventory is also promising for buyers: New listings of homes for sale are up 7% year-over-year, and the total number of homes for sale is near its highest level since late 2020. In addition, Redfin says the uptick in homes for sale, along with the fact that many listings are growing stale, means many of the less-desirable homes on the market are having a hard time finding a buyer. That gives homebuyers in some places a chance to get a home for under the asking price and negotiate for other money savers, like home repairs or help with closing costs.

Commenting on the report, Redfin Chief Economist Daryl Fairweather said:

“Now is a good time—at least compared to the recent past—for serious house hunters to get under contract on a home. The combination of declining mortgage rates, rising supply and a lot of inventory growing stale means buyers have a window where they have more purchasing power than earlier in the year and more homes to choose from. But it’s hard to say how long the window will last. Declining rates should bring many homebuyers back to the market soon, which means competition would tick up and home prices would increase even faster than they already are. It’s also possible rates drop further in 2025, which would make monthly costs decline more and increase competition even more. One thing is for sure: lower rates will lead to more home sales.”