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Are Homebuyers Seizing Dropping Housing Payments?

The typical homebuyer’s monthly housing payment dropped to $2,671 in the four weeks ending July 21, the lowest in four months and down $166 from April’s peak. This decrease is due to falling mortgage rates, now at 6.77%, and an increase in inventory, giving buyers more options. However, despite these favorable conditions, pending home sales are down 5.7% year over year, and buyer interest, as measured by Redfin’s Homebuyer Demand Index, is flat month over month and down 16% from last year.

High home prices and political and economic uncertainty are keeping buyers cautious. Some potential buyers are waiting until after the November presidential election to make a move, hoping for a more stable economy and housing market. This hesitation is reflected in lower Google searches for homes and reports from Redfin agents that clients are delaying purchases due to these uncertainties.

Case-Shiller Index Rises Again: Impact on Housing Market

The S&P CoreLogic Case-Shiller U.S. National Home Price Index recorded a 5.9% year-over-year gain in May, marking the 11th consecutive month of annual increases. Although this is a slight decrease from the previous month’s 6.4% gain, the index still reached a new peak, surpassing the previous high set in April. The 10-City and 20-City Composite Indices, which track prices in major metro areas, also saw annual gains, albeit at a slower rate compared to the previous month. Brian D. Luke from S&P Global noted that the national index has appreciated 4.1% year-to-date, the fastest start in two years.

New York posted the highest annual gain among the 20 major cities, with a 9.4% increase, while Portland had the lowest growth at 1%. All 20 markets observed yearly gains for the past six months, a streak not seen since the COVID housing boom. CoreLogic’s chief economist, Selma Hepp, expects further weakening in home price growth due to seasonal effects and high mortgage rates. She noted that potential Fed rate cuts and falling mortgage rates could lead to renewed interest from homebuyers, potentially heating up prices in some markets. Luke added that the longer rates remain high, the more home prices will continue to climb, making the waiting game costly for potential buyers.

Existing-Home Sales Down 5.4% in June; Median Price Hits Record $426,900

In June, existing home sales fell 5.4% from May, reaching a seasonally adjusted annual rate of 3.89 million, according to the National Association of REALTORS®. This decline was consistent across all four major U.S. regions. Despite the drop in sales, the median sales price hit a record high of $426,900, a 4.1% increase from the previous year. Inventory levels rose to 1.32 million units, up 23.4% from last year, providing a 4.1-month supply, the highest since May 2020.

The REALTORS® Confidence Index showed homes typically stayed on the market for 22 days in June. First-time buyers accounted for 29% of sales, while all-cash sales comprised 28%. Single-family home sales fell 5.1% from May, and condo/co-op sales dropped 7.5%. Regionally, the Midwest saw the largest monthly decline in sales at 8%, while the Northeast had the highest price increase at 9.7%. The 30-year fixed-rate mortgage averaged 6.77% in mid-July, slightly down from the previous week.