U.S. Homebuyer Monthly Payments Surge by 20% Year-on-Year in July

According to recent data from Redfin, the average monthly mortgage payment for a typical U.S. homebuyer stood at $2,605 during the four weeks ending in late July 2023, marking a significant increase of 19% compared to the previous year.

Persistently high housing payments can be attributed to the ongoing elevation in mortgage rates, with weekly average rates hovering around 6.9% during this week, coupled with a continuous uptrend in home prices. The median home-sale price has surged by 3.2% year over year, representing the most substantial increase since November.

The escalation in home prices is primarily fueled by the imbalance between supply and demand in the housing market. Elevated mortgage rates have dissuaded many potential sellers from listing their properties, as existing homeowners opt to retain their comparatively lower mortgage rates.

Consequently, the total inventory of homes available for sale has plummeted by 19%, marking the most significant decline in a year and a half, while new listings have declined by 21%.

Although high mortgage rates have sidelined some prospective buyers, the impact is not as pronounced as the deterrent effect on potential sellers.

Redfin’s Homebuyer Demand Index, which gauges early-stage demand by tracking requests for tours and other buying services facilitated by Redfin agents, has experienced only a marginal 4% decrease compared to the previous year.

Indicators Reflecting Homebuying Trends:

As of the week ending August 3, the average 30-year fixed mortgage rate stood at 6.9%, marking a slight uptick from the previous week but remaining marginally lower than the six-month peak recorded three weeks prior. Specifically, the daily average rate was 7.2% on August 3.

Mortgage-purchase applications experienced a 3% decline during the week ending July 28 compared to the previous week, after seasonal adjustments. Notably, purchase applications witnessed a substantial 26% drop compared to the same period a year ago.

The seasonally adjusted Redfin Homebuyer Demand Index exhibited a 4% decrease from the previous month and a corresponding 4% decrease from the same period last year, indicating subdued homebuyer interest.

In terms of online activity, Google searches for “homes for sale” remained relatively stable, showing a flat trend compared to the previous month for the week ending July 29.

However, there was a noticeable decline of approximately 16% in searches compared to the same period the previous year.

Touring activity, as reported by home tour technology company ShowingTime, demonstrated a contrasting trend. As of July 28, touring activity had increased by 8% since the beginning of the year.

This stands in stark contrast to the 5% decrease observed at the same time last year, suggesting sustained interest in property viewings despite broader market fluctuations.

Insights into the U.S. Housing Market Across 400+ Metro Areas:

Median Home Sale Price and Price Trends:

The median home sale price stood at $380,250, reflecting a notable increase of 3.2% compared to the previous year, marking the most substantial surge since November.
Leading the surge were metros like Miami (12.7% YoY), Cincinnati (9%), Milwaukee (8.6%), Anaheim, CA (8.5%), and West Palm Beach, FL (8.4%).
However, 19 metros experienced declines in home-sale prices, with notable drops observed in Austin, TX (-9.9% YoY), Phoenix (-4.2%), Detroit (-3.9%), Las Vegas (-3.5%), and Fort Worth, TX (-3.2%).

Median Asking Price of Newly Listed Homes:

The median asking price for newly listed homes reached $387,223, representing a 1.7% increase compared to the previous year.

Monthly Mortgage Payments:

At an average mortgage rate of 6.9% for the week ending August 3, the monthly mortgage payment for a median-asking-price home amounted to $2,605.
Although this reflects a slight decrease of about 1% ($32) from the record high noted three weeks earlier, it marks a significant 19% increase compared to the previous year.

Pending Home Sales:

Pending home sales witnessed a substantial year-over-year decline of 14.4%, continuing a streak of double-digit decreases observed for over a year.
Most metros analyzed experienced declines in pending home sales, with significant drops noted in Providence, RI (-29.5% YoY), Newark, NJ (-28.8%), Warren, MI (-26.4%), Boston (-26.3%), and Cincinnati (-25.1%).

New Listings of Homes for Sale:

New listings of homes for sale plummeted by 21.3% year over year, marking a significant decline albeit the smallest in three months.
This decline was observed across all metros analyzed, with Las Vegas (-43.4% YoY), Phoenix (-39.7%), Providence, RI (-32%), Sacramento, CA (-31.9%), and Oakland, CA (-30.7%) experiencing the most substantial drops.

Active Listings and Months of Supply:

Active listings, indicating the number of homes listed for sale during a period, witnessed a notable 19% drop compared to the previous year, marking the most significant decline since February 2022.
Months of supply, a gauge of supply-demand balance, reached 2.9 months, the highest level since April. This indicates a shift towards a more balanced market, as typically, four to five months of supply is considered balanced.

Market Dynamics:

Over 43.7% of homes that went under contract received accepted offers within the first two weeks on the market, showcasing heightened buyer interest compared to the previous year.
Homes that sold remained on the market for a median of 27 days, up from 23 days observed a year earlier.
Approximately 35.9% of homes sold above their final list price, down from 43% reported a year earlier.
The percentage of homes for sale with price drops averaged at 5.8% per week, showing a slight decrease from the previous year’s 6.3%.
The average sale-to-list price ratio stood at 100%, reflecting a closer alignment between final selling prices and listing prices compared to the previous year’s 100.7%.