Monthly housing payments have declined nearly $300 from April’s all-time high. Improving affordability has yet to push up pending sales, but that could change after the Fed cut interest rates for the first time since 2020 this week.

(NASDAQ: RDFN) — The median U.S. housing payment was $2,534 during the four weeks ending September 15, down 2.7% from a year earlier–the biggest decline since May 2020, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Monthly payments are falling because mortgage rates dropped to their lowest level in 20 months in the lead-up to the Fed’s first interest-rate cut since 2020.

Mortgage applications are rising, but pending sales have yet to improve. Mortgage-purchase applications are up 5% week over week, with some buyers jumping off the sidelines as mortgage rates fall. But many would-be buyers are still holding off, with pending home sales down 6.9% year over year, one of the biggest declines since October 2023. That’s despite both lower housing payments and more homes to choose from: New listings are up 5.1% year over year, and the total number of homes for sale is up 16.1%.

There are several reasons sales haven’t yet picked up. Home prices are still rising, and Redfin agents report that some would-be buyers are waiting for mortgage rates to fall more, while other prospective buyers aren’t even aware that rates have started to fall. Aside from rate-related reasons, agents report many house hunters are confused about the new NAR rules and others are waiting until after the election.

“Buyers are holding their breath, watching interest rates. There’s pent-up energy, with people waiting for the right moment to buy a home–and it’s feeling like the dam is going to break soon,” said Kristin Sanchez, a Redfin Premier agent in Nashville, TN. “Once things are more settled and people know where mortgage rates are going to land and who is going to be president, the market is going to get busier. I think winter will be busier than summer, which is the opposite of a usual year.”

Inventory is piling up. The combination of rising inventory and slow sales is causing for-sale homes to pile up, and many listings are growing stale. There are roughly four months of supply available on the market, the most since February and up from just over three months last year. Months of supply is the length of time it would take for the existing supply of homes to be bought up at the current pace of sales; the higher the number, the more buyer-friendly the market.

Fed’s interest-rate cut may bring buyers off the sidelines. Demand may improve after yesterday’s interest-rate cut, with house hunters who had been waiting for the Fed to lower rates jumping into the market now that it has happened. Redfin economists note that mortgage rates are unlikely to fall much further in the next few weeks because markets had already priced in expectations of an aggressive rate cut, and the Fed is projecting only gradual cuts from here on out. But mortgage rates may swing up or down before the end of the year, depending on upcoming inflation and jobs reports.

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

Key housing-market data

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

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

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