U.S Mortgage Payments Drop to Lowest Level in Eight Months

Daily average mortgage rates have fallen to 6.82% and housing payments have dropped to their lowest level since April. That’s according to a new report from Redfin. This marks the first time daily rates have dipped below 7% since July.

Rates dropped after the Fed brought good news to homebuyers at its December 13 meeting, indicating they’re on a path toward lowering interest rates more and sooner than expected. That’s another piece of evidence that mortgage rates are likely to drop into the mid-6% range in 2024, consistent with Redfin’s housing-market predictions.

Mortgage payments are at their lowest level in eight months. Even before the Fed meeting, mortgage rates had declined substantially from their peak, bringing homebuyers some relief. The median U.S. housing payment is $2,503 as of the four weeks ending December 10, down $233 from October’s record high and its lowest level since April.

Mortgage-purchase applications are up 19% from the three-decade low they dropped to at the start of November. And Redfin’s Homebuyer Demand Index—measure of requests for tours and other homebuying services from Redfin agents—is up 3% from a month ago.

Prices and new listings have risen. The median U.S. home-sale price is up 4.5% year over year, the biggest increase since October 2022. Prices are rising because demand is outpacing supply. Even though new listings are up 8% year-over-year—the biggest increase since July 2021—the total number of homes for sale is still down 5%.

Leading Indicators of Homebuying Demand and Activity

• Weekly average 30-year fixed mortgage rate was 7.03% as of the week ending December 7, up from 6.33% year-over-year. This represents the sixth straight weekly decline, down from two-decade high of 7.79% seven weeks earlier, according to Freddie Mac.
• Mortgage-purchase applications were up 4% from a week earlier as of week ending December 8, down an overall 18%, according to the Mortgage Bankers Association.
• The Redfin Homebuyer Demand Index was up 3% from a month earlier as of the week ending December 10, down an estimated 7%, according to Redfin.
• Google searches for “home for sale” were down 9% from a month earlier as of December 9, remaining essentially unchanged, according to Google Trends.
• Touring Activity was down 36% from the start of the year as of December 12, according to ShowingTime. At this time last year, it was down 43% from the start of 2022.

Key Housing Market Data (for the four weeks ending December 10):

• The median sale price was $364,535, representing a 4.5% year-over-year change, the biggest increase since October 2022. Prices are up partly because rapidly rising mortgage rates were hampering prices during this time last year.
• The median asking price was $368,247, representing a 5.7% year-over-year change.
• The median monthly mortgage payment was $2,503 at a 7.03% mortgage rate, representing a 12% year-over-year change, down $233 (-9%) from all-time high set during the four weeks ending October 22. This is the lowest level seen since April.
• Pending sales were 58,532, representing a -7.8% year-over-year change.
• New listings were 57,866, representing a 7.6% year-over-year change, the biggest uptick since July 2021. This increase is partly because new listings were falling at this time last year.
• Active listings were at 844,170, representing a -5.4% year-over-year change, the smallest decline since June.
• Months' supply of homes was four, representing a 0.2 percentage point increase.
• The share of homes off market in two weeks was 29.7%, up from 28% year-over-year.
• The median days on market was 36, down three days year-over-year.
• The share of homes sold above list price was 26.2%, up from 24% year-over-year.
• The share of homes with a price drop was 5.3%, representing a 0.4 percentage point increase year-over-year.
• The average sale-to-list price ratio was 98.7%, representing a 0.5 percentage point increase year-over-year.

Overall, the medial sale price declined in three metros.

Metros with biggest year-over-year increases in median sale price:

1. Anaheim, CA (19.2%)
2. Fort Lauderdale, FL (14.9%)
3. Newark, NJ (14.6%)
4. New Brunswick, NJ (11.5%)
5. Miami (11.2%)

Metros with biggest year-over-year declines in median sale price:

1. Austin, TX (-5.3%)
2. San Antonio (-3.3%)
3. Houston (-1.7%)

Contrarily, pending sales increased in three U.S. metros.

Metros with biggest year-over-year increases in pending sales:

1. Milwaukee (3.3%)
2. Fort Worth, TX (1%)
3. Chicago (0.3%)

Metros with biggest year-over-year declines in pending sales:

1. Cincinnati (-22.2%)
2. Providence, RI (-15%)
3. New York (-13.8%)
4. Sacramento, CA (-13.6%)
5. New Brunswick, NJ (-13.5%)

New listings declined in 15 metros across the nation.

Metros with biggest year-over-year increases in new listings:

1. Phoenix (24.4%)
2. Orlando, FL (21.1%)
3. Miami (18.6%)
4. Fort Worth, TX (13.6%)
5. Las Vegas (13.1%)

Metros with biggest year-over-year declines in new listings:

1. San Francisco (-23.7%)
2. Atlanta (-14.5%)
3. Oakland, CA (-7.4%)
4. Seattle (-5.7%)
5. Indianapolis (-4%)

While the challenges of homeownership remain a hassle for many, declining costs are bringing homebuyers off the sidelines.

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