Homebuyers have faced high costs during the spring and summer homebuying season.
Mortgage rates are the most obvious problem right now, but over my years of reporting on the housing market, I’ve witnessed home affordability remain a national crisis for Americans, regardless of what rates are doing.
All of these pricing and affordability issues have culminated into a larger predicament. The real estate technology company Redfin has discovered that the median monthly housing payment in the U.S. reached its highest point in a year during the four-week period ending June 14.
The median monthly mortgage payment is now $2,647. This is also just $100 under the 2023 high, according to the Redfin report.
To all of you homebuyers out there, you aren’t imagining it: Homeownership truly is becoming more and more expensive.
High mortgage rates and home prices are the culprits
The average 30-year fixed mortgage rate had dropped to just below 6% in late February, according to Freddie Mac, then jumped after the United States and Israel attacked Iran. They’ve stayed relatively high since then, hovering around 6.5% for much of the time.
Mortgage rates may decrease now that there are plans to end the war with Iran, but since the Federal Reserve plans to hike its rate later this year, there’s no guarantee that home loan rates will fall once the conflict in the Middle East settles.
The near-term future of mortgage rates is muddied, and they could very well remain near where they’ve stalled for the past several weeks.
For now, the Redfin report identifies high mortgage rates as one of the main reasons housing payments have gotten so high.
Related: More on Mortgage Rates
Home price growth has cooled since 2021 and 2022, but housing prices are still a problem for the typical American. Prices spiked during the peak of the Covid pandemic, and that trend has lingering effects on the real estate market.
“The pandemic reset the cost of buying a home, spreading million-dollar starter homes from a handful of coastal states to more than two dozen across the country,” senior economist Kara Ng wrote for Zillow. “Now, a record 242 cities across 26 states have starter homes valued at $1 million or more.”
The annual median home sale price has increased by 2.3% to an all-time high of $403,889, according to the Redfin Housing Market Tracker. The combination of high mortgage loan rates and record housing prices has resulted in soaring monthly mortgage payments.
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Redfin finds high costs also deter sellers
High housing costs are deterring many potential homebuyers from making offers. But buyers aren’t the only ones put off right now. Sellers aren’t exactly thrilled, either.
With low buyer demand, the national housing market is no longer a seller’s market. Homeowners aren’t able to sell homes as quickly, less competition keeps their prices lower than they’d prefer, and many have to cut their listing prices to appeal to buyers.
More on mortgages and the housing market:
- Mortgage rate outlook shifts after Fed decision
- Americans face major decision after housing market news
- Fannie Mae predicts mortgage rate change
Now, fewer sellers are entering the real estate market. Weekly new listings decreased by 0.4%, and the total number of residential properties for sale dropped by 0.1%.
“A lot of sellers want to list higher than they should, and my biggest struggle is getting them to price with the market — or just below the market, if they want to create a frenzy,” Dawn Kane, a Redfin Premier agent, wrote for Redfin.
Key takeaways from Redfin’s report
The overall message from Redfin’s report is that monthly housing costs have spiked. There are a few other crucial details buyers should know as homebuying season wraps up.
- Mortgage rates impact multiple parts of the housing market. Redfin notes that both weekly and daily mortgage rates are leading impactors of homebuying activity and demand. At the time of the report, weekly rates from Freddie Mac and daily rates from Mortgage News Daily had both increased in the last week.
- Fewer people are applying for mortgages. Redfin notes that weekly mortgage-purchase applications have decreased by 3%, according to data from the Mortgage Bankers Association.
- General interest in home-buying is cooling. By using Google Trends, the Redfin team found that Google searches for the phrase “homes for sale” are down roughly 10% from the same period a month earlier. Even at what is the earliest stage in the home-buying process for many, interest is down.
- Median sale and asking prices have increased. The median sale price during this four-week period was $403,889, a 2.3% increase from last year. The seasonally adjusted median asking price was $405,651, which is a 2.7% annual increase.
- Home price trends vary by location. The median annual sale price has soared in cities such as San Francisco (10.4%) and Pittsburgh (9.3%). However, it has decreased in 11 of the 50 largest metro areas, including San Jose (-5.3%) and Portland, Oregon (-2.4%).
Source: Redfin
Related: More on the Housing Market