Buyers, Take Note: Mortgage Rates Are Falling, Home-Price Growth Is Cooling and Supply Is Outpacing Demand

Redfin economists say serious homebuyers have a window of opportunity to lock in a mortgage rate, as rates could fluctuate as more economic data is released in the coming weeks

House hunters got some relief this week as the daily average mortgage rate dropped to its lowest level in nearly a year after a softer-than-expected jobs report. That’s according to a new report from Redfin, the real estate brokerage powered by Rocket.

A homebuyer on a $3,000 monthly budget can afford a $458,750 home with a 6.55% mortgage rate, roughly the daily average on Wednesday; that buyer has gained roughly $20,000 in purchasing power since mortgage rates hit a recent peak of 7.08% in May.

There are a few other bright spots for house hunters this week:

• Home-price growth is losing steam. The median U.S. asking price rose just 2.3% year over year during the four weeks ending August 3, one of the smallest increases in two years. Sellers have started pricing lower in response to the buyer’s market; Redfin economists predict sale prices will fall 1% by the end of the year. Additionally, just about one-quarter (26.6%) of homes are selling above asking price, down from 31% a year ago.
• There are more home sellers than buyers in the market. The total number of homes for sale is up 8.5% year over year, while pending sales are down 1.2%.
• Many sellers are willing to negotiate. Redfin agents in many parts of the country, including the Bay Area, Phoenix, Washington, D.C. and coastal Florida, report that a lot of sellers are open to negotiating with buyers. Some are accepting offers under asking price or providing freebies to sweeten the deal, like money for closing costs or repairs, to get their home offloaded.

House hunters should keep in mind that the window of opportunity for buyers could be short. New listings have lost steam, staying essentially flat year over year, as would-be sellers realize they may not get the price they want for their home. Additionally, lower mortgage rates could bring more buyers and more competition. Mortgage-purchase applications have already increased, rising 2% week over week.

“Serious homebuyers should consider taking this window of opportunity to act fast and lock in a mortgage rate at the lowest level we’ve seen since last October,” said Chen Zhao, Redfin’s head of economics research. “Last week’s soft jobs report ups the chances of the Fed cutting interest rates in September. The market’s anticipation of that cut has already pushed mortgage rates down, and there’s no guarantee they’ll fall further. There’s a chance mortgage rates could fluctuate when more economic data is released in the coming weeks.”

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page.

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-mortgage-rates-fall-price-growth-slow

Contacts

Contact Redfin
Redfin Journalist Services:
Kenneth Applewhaite
[email protected]