Redfin Reports Typical Monthly Housing Payment Dips Below Record

(Illustration courtesy of Redfin)

The typical U.S. homebuyer’s monthly housing payment was $2,722 during the four weeks ending July 14, $115 lower than April’s record high, according Redfin, Seattle.

That’s despite home prices sitting just about $100 shy of last week’s record high, Redfin said in its July Housing Market Update.

Daily average mortgage rates have dropped to their lowest level since February after the recent cooler-than-expected inflation report.

“Now that it’s looking increasingly likely the Fed will cut interest rates by the end of the year, some house hunters believe mortgage rates will fall more and are waiting for that to happen before they buy,” said Chen Zhao, Redfin’s economic research lead. “But they may be waiting in vain; it’s unlikely mortgage rates will drop much lower in the next few months, as markets are already pricing in the expectation of a rate cut in September, followed by several more at the end of 2024 and into 2025.”

Zhao noted now may be the right time for house hunters to get serious about making offers before prices increase even more and they lose some power. “Plus, there are more homes to choose from, and many listings are growing stale, giving buyers an opportunity to negotiate,” she said.

Buyers have yet to react strongly to falling rates and increasing inventory, the report said. Pending sales are down 5.6% year over year, the biggest decline in eight months, and Redfin’s Homebuyer Demand Index is down 15%. Mortgage-purchase applications are down 3% week over week on a seasonally adjusted basis. That’s despite mortgage rates falling year over year; the 6.83% daily average as of July 17 is down from 6.9% a year ago.

“Some buyers are sitting on the sidelines because they’re hoping mortgage rates will decline more,” the report noted.