Potential US Homebuyers Remain Sidelined Even As Payments Hit Lowest Level Since March

On Thursday, Redfin reported that the median US monthly housing payment was $2,667 during the four-week period ending on July 28th. This is the lowest level since March.

Redfin also reported that payments are declining because mortgage rates and sale prices are falling: The weekly average mortgage rate is 6.78%, down from May’s five-month high of 7.22%. The median home-sale price is $392,563, down nearly $4,000 from its early-July peak. Redfin says this is a typical seasonal decline and not a signal that prices are falling unexpectedly.

Despite improving affordability, pending home sales are down 5.7% year-over-year—the biggest decline in nine months—and mortgage-purchase applications are down 14% (purchase applications are down 2% week-over-week). That’s largely because even though it’s more affordable to buy a home now than it was in the spring, prices and payments are still near record highs, Redfin said.

Finally, Redfin points out that another reason for dwindling sales is a lack of desirable listings. New listings are up 4% year-over-year, but they’re losing momentum; that’s the smallest increase since November 2023. And nearly two-thirds of homes for sale have been sitting on the market for at least 30 days without going under contract, indicating that many of today’s listings don’t match the wants and/or needs of house hunters. Much as pending sales are declining partly due to new listings losing steam, the slowdown in new listings is partly due to limited demand.

However, Redfin agents are reporting that there is plenty of demand for turnkey homes in desirable neighborhoods, and some expect sales to pick up soon as mortgage rates come down.