Soaring mortgage rates and home prices are continuing to dampen affordability for homebuyers. Pending-home sales fell 13% from a year ago for the four weeks ending Sept. 17, according to a new report from Redfin.
Combined with elevated mortgage rates, monthly housing payments are at an all-time high. This is pushing many prospective homebuyers to the sidelines until the market becomes healthier.
Adding to buyers’ affordability pain, median home prices rose 3.4% year over year to $374,975 during the same four-week time period, Redfin found.
Meanwhile, available inventory continues to dwindle as many homeowners stay put to keep their relatively low mortgage rates. For the four weeks ending Sept. 17, total active listings were at 806,701, down 16.2% compared to a year ago.
However, new listings have stabilized, ticking up slightly since the beginning of September. HousingWire analyst Logan Mohtashami said the last four weeks ending Sept. 17 have been the most volatile since mortgage rates breached 6% in 2022.
“In one week, we had the biggest decline in new listings data all year, which might indicate Americans are giving up on listing their homes. But the next week, we had the biggest increase of the year, which might show that people are rushing to list their homes,” Mohtashami said on HousingWire.
New listings are down 6.7% from a year earlier but posted the smallest decline since July 2022. It’s still worth noting that new listings were falling rapidly at this time last year, the Redfin report underlined.
Meanwhile, mortgage rates are not expected to cool anytime soon as the Fed announced on Wednesday that interest rates were likely to remain higher than anticipated heading into 2024 and 2025.
The Fed’s decision to halt interest-rate hikes this week is unlikely to bring solace to homebuyers as borrowing costs and mortgage rates stay elevated. Buyers who can afford to jump into the market now might see the incentive to do so before home prices and/or interest rates go up even more.