The weekly average mortgage rate has dropped to 6.01 percent, its lowest level since September 2022. That has pushed the median monthly housing payment down to $2,599, 2.6 percent lower than a year ago, according to a new report from Redfin. Wages are nearly 4 percent higher than they were a year ago, improving affordability further.
Homebuyers have gained $34,000 in purchasing power since last year, when rates were sitting at around 6.9 percent.
Falling rates may bring some house hunters out of the woodwork in the coming weeks, especially as the spring homebuying season begins. For now, however, a lot of would-be buyers are staying on the sidelines. Pending home sales dropped 5.5 percent annually during the four weeks ending Feb. 22, the biggest decline in over a year. Pending sales are falling in all but seven of the 50 most populous metros. Some sellers are holding back, too, with new listings down 2.8 percent year over year.
Even though rates have come down and affordability is improving, prospective buyers have faced some headwinds since the start of the year. One, home-sale prices are still rising; they’re up 1 percent year-over-year, counteracting some of the progress made by falling mortgage rates. Two, some Americans are jittery about economic uncertainty, including concerns about layoffs and the stock market. Three, the winter has been unusually cold and snowy in many parts of the country.
“Nobody wants to go out and search for homes in ‘snowcrete,’” Patricia Ammann, a Redfin Premier agent in Arlington, VA., said in a release. “Severe winter weather has hit demand hard. We’re also still feeling some effect from last year’s federal government layoffs: People who lost their jobs were not in the housing market, and people who still had their jobs were worried about getting laid off. But those nerves are easing; I’m starting to see house hunters — especially affluent people with solid jobs — get serious about their search. There’s competition for fixed-up houses in desirable neighborhoods.”