[1]According to a new report from Redfin [2], one-quarter of homes for sale in Austin, TX (25.8%) have lower estimated monthly housing payments than they would have if they had been for sale a year ago. That’s a higher share than any other major U.S. metropolitan area Redfin analyzed and more than triple the nationwide share of 7.1%.
Seattle trails close behind at 23.6%, followed by San Francisco (18.8%), New York (18.3%), and Pittsburgh (15.6%), according to a Redfin analysis of U.S. single-family homes, condos/co-ops and townhouses for sale as of April 11, 2023.
LendingTree estimated what a homebuyer’s monthly housing payment would be on those homes using the Redfin Estimate [3] of the homes’ value in April 2023 and the average U.S. mortgage rate in March 2023.
The housing market started to slow last year in response to rising mortgage rates, bringing down home prices in some parts of the country. While monthly payments on many for-sale homes remain higher than they would’ve been a year ago due to elevated mortgage rates, other homes have become more affordable because their value has dropped enough to offset the cost of a higher rate.
This serves as great news for house hunters following months of surging price increases. The median U.S. home-sale price fell 3.3% year-over-year in March, the biggest annual decline in more than a decade. That’s bringing back homebuyers in some markets. In Austin, home prices decreased 13.6% year-over-year in March — the second biggest decline in the country. Pending home sales in Austin were down 32.9% year-over-year in March, but that’s an improvement from a record decline of 45.6% in January.
“We’re seeing a little more movement among homebuyers in Austin right now,” said local Redfin Premier real estate agent Andrew Vallejo. “There’s this group of house hunters that has been waiting on the sidelines for prices to come down, and they’ve decided to start buying this spring. They’re taking their time though; mortgage rates are still volatile and they know they have some negotiating power.”
Home sellers gave concessions to buyers in nearly half of home sales recorded by Redfin agents during the three months ending February 28, up from less than one-third a year earlier, a recent Redfin analysis found.
Home prices are falling fastest in pandemic boomtowns like Austin and expensive coastal markets like Seattle and San Francisco because prices in those places skyrocketed to unsustainable levels in recent years. Prices are now making their way back down to earth after many homebuyers were priced out.
In Boise, ID, the median sale price fell 15.4% year-over-year in March — more than anywhere else in the U.S. — and 12.3% of homes for sale have lower estimated monthly payments than they would have a year ago. However, many people remain priced out, according to local Redfin Premier real estate agent Shauna Pendleton.
“Home prices in Boise jumped during the pandemic because people were flooding in from high-income states like California and Washington. Now locals can’t afford to buy homes,” Pendleton said. “Prices rose too drastically, so now they’re dropping, but they still haven’t fallen enough to bring a ton of buyers back to the market.”
Oftentimes, “more affordable” doesn’t mean “affordable.” Take Seattle, where the median home-sale price was $742,000 in March, nearly double the national median of about $400,000. San Francisco’s $1.4 million median sale price is nearly quadruple the national median. The $450,000 median sale price in Austin isn’t far from the national median, but is 35.8% higher than it was at the onset of the pandemic in March 2020. Since incomes haven’t kept up, many people remain priced out of homeownership.
In many places, home prices haven’t fallen enough to offset the cost from higher mortgage rates, meaning homeownership remains prohibitively expensive for many Americans.
Mortgage rates are now near their highest level in over two decades, which has sent the monthly payment for the typical homebuyer up more than $250 from a year ago.
To read the full report, including more data, charts and methodology, click here [2].