US Housing Payments Post Biggest Year-Over-Year Decline Since May 2020

On Thursday, Redfin reported that during the four-week period ending on September 15th, the median US housing payment was $2,534, down 2.7% from a year earlier—the biggest decline since May 2020. Monthly payments are falling because mortgage rates dropped to their lowest level in 20 months in the lead-up to the Fed’s first interest rate cut since 2020.

Mortgage applications are rising but pending sales have yet to improve, Redfin said. Mortgage-purchase applications are up 5% week-over-week, with some buyers jumping off the sidelines as mortgage rates fall. But many would-be buyers are still holding off, with pending home sales down 6.9% year-over- year—one of the biggest declines since October 2023. That’s despite both lower housing payments and more homes to choose from: New listings are up 5.1% year-over-year, and the total number of homes for sale is up 16.1%.

Finally, Redfin points out that inventory is piling up. The combination of rising inventory and slow sales is causing for-sale homes to pile up, and many listings are growing stale. There are roughly four months of supply available on the market, the most since February and up from just over three months last year. Months of supply is the length of time it would take for the existing supply of homes to be bought up at the current pace of sales; the higher the number, the more buyer-friendly the market.