Monthly housing payments have dropped to their lowest level in four months, but homebuyers and sellers are not yet reacting. In addition to pending home sales falling, new listings posted their smallest increase in three months, a new Redfin report found.
The median monthly housing payment was $2,667 during the four weeks ending July 28 – its lowest level since March. Payments are declining because mortgage rates and sale prices are falling: the weekly average mortgage rate was 6.78 percent, down from May’s five-month high of 7.22 percent. The median home-sale price was $392,563, down nearly $4,000 from its early July peak – a typical seasonal decline and not a signal that prices are falling unexpectedly, the report stated.
Despite improving affordability, pending home sales were down 5.7 percent year-over-year, the biggest decline in nine months, and mortgage-purchase applications were down 14 percent. Even with increased affordability, home prices and payments were still near record highs. Additionally, Redfin agents reported some prospective buyers are waiting until after the presidential election to purchase a home.
Another reason for dwindling sales was a lack of desirable listings. New listings were up 4 percent year-over-year, but they are losing momentum, with this most recent increase being the smallest one observed since November. And nearly two-thirds of homes for sale have been sitting on the market for at least 30 days without going under contract, indicating many of today’s listings do not match the wants and/or needs of house hunters. Much as pending sales were declining partly due to new listings losing steam, the slowdown in new listings was partly due to limited demand, the report stated.
Redfin agents reported there was plenty of demand for turnkey homes in desirable neighborhoods, and some expected sales to pick up soon as mortgage rates come down.
“Local buyers are still worried about affordability, especially since wages haven’t caught up with home-price growth and inflation has cut into their budgets. But now that rates are declining, some fence-sitters are getting off the fence,” Nicole Stewart, a Redfin agent in Boise, Idaho, said in a release. “I’m working with some buyers who need larger homes to accommodate growing families, some who are relocating from California, Washington or Oregon, and some who are taking advantage of all the new builds in our area.”