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Average Homebuyer’s Mortgage Payment Up 15% Since August

The typical homebuyer’s monthly mortgage payment has climbed $337 —or 15%— over the past six weeks to a new high of $2,547, according to a new report from Redfin. [1]

The extreme volatility and recent surge in mortgage rates [2] has caused many potential homebuyers to delay or cancel their plans to purchase a home altogether. Pending sales dropped to their lowest level since January, and the share of homes sold above list price fell to its lowest level in over two years.

Homeowners are increasingly reluctant to enter the market [3] as mortgage rates approach 7%. Even though new listings are down to their lowest level since February, months of supply is growing quickly, reaching three months for the first time since July 2020. This means that more homes are lingering on the market because they are undesirable and/or overpriced, resulting in the share of home sellers dropping their price, reaching its highest level on record since 2015.

Median Mortgage Payment

Key housing market takeaways for 400+ U.S. metro areas:

Pending Sales

“It’s imperative for home sellers to react quickly and aggressively as the market turns,” said Senior VP of Real Estate Operations Jason Aleem. “This means adjusting your pricing immediately if you want to be competitive and attract offers from a smaller pool of qualified homebuyers. If your home isn’t the ‘belle of the ball’ in your neighborhood, you’re going to need to cut the price to sell it.”

Leading indicators of homebuying activity:

“It’s important to remember that much of the housing market data and neighborhood comparables being reported are based on home purchases that were agreed to a month or more ago when mortgage rates were a point and a half lower,” said Redfin Deputy Chief Economist Taylor Marr. “Sellers should anticipate that buyers are unwilling or unable to pay a price similar to what their neighbor’s home sold for a month ago, and buyers should connect with their lenders to find ways to mitigate the impact of rising rates. This could include paying upfront to lock in a rate, switching to an ARM and tightening your budget so you don’t end up with a monthly mortgage payment that’s a stretch to afford in the months to come.”

To read the full report, including more data, charts and methodology, click here [1].