The latest adjustment marks the lowest level for typical payments in six months and represents a month-on-month increase of just 1%, the smallest increase in five years, Redfin’s analysis shows.
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The typical monthly mortgage payment is now $2,588, down nearly $250 from April’s all-time high, according to an analysis released Thursday by Redfin.
The latest adjustment marks the lowest level for typical monthly mortgage payments in six months, and the monthly increase was just 1%, the smallest increase in five years, according to payments tallied by Redfin over the four weeks ending Aug. 11. .
Combined with falling mortgage rates, the lower payments should convince some potential buyers to return to the market if they haven’t already, Redfin Premier agent Brynn Rea said in a statement. On Wednesday, mortgage purchase applications rose 3% from the previous month on a seasonally adjusted basis, according to the Mortgage Bankers Association.
“I expect once mortgage rates start to come down, more buyers will show up,” Wray said. “While home-hunting activity has increased, it’s not significant. Budget remains a top concern for buyers, and homes are still quite expensive for many.
The total number of homes for sale in the United States has increased by nearly 20% year-on-year, and a large part of the inventory has stayed on the market for a longer period of time, providing buyers with more room to negotiate prices. Additionally, less than 30% of homes sold above asking price, down from 35% last year.
Despite improvements in costs and inventory, pending home sales did not pick up, falling 5.1% annually to 82,160 units, the largest decline since November except for a 6.2% drop last month.
Several factors are causing buyer hesitation, including the fact that home prices, while below their July peak, are still close to record highs. Additionally, some potential buyers are taking a wait-and-see approach due to the economic uncertainty surrounding the upcoming presidential election.
Buyers are unsure whether mortgage rates will continue to fall or if a U.S. recession is imminent.
Redfin’s recent CPI report showed that inflation continues to ease, reinforcing expectations that the Federal Reserve may begin cutting interest rates in September, although the extent of the cut is uncertain. The market has already priced in expectations of a sharp interest rate cut.
If the Fed fails to meet these expectations, interest rates may rise slightly. If the rate cut is as deep as expected, mortgage rates could fall even further. If lower interest rates stimulate demand, home prices could rise.
Redfin’s homebuyer demand index, which tracks requests for tours and other services from Redfin agents, fell 10% annually, the smallest decline since April.
“Many buyers are waiting to see if mortgage rates will fall further, especially if the Federal Reserve cuts rates, and they are also paying close attention to the economy and the upcoming election,” Wray said.
Email Richelle Hamill
