According to national property broker Redfin, although U.S. mortgage rates are inching down from their recent peak, U.S. housing affordability isn't improving much. Reflecting this further, mortgage-purchase applications are sitting at their lowest level in nearly three decades signaling a drop in U.S. home buyer demand.
With the median U.S. home-sale price up 4.5% year over year during the four weeks ending September 3, 2023, and mortgage rates remaining above 7%, the typical monthly mortgage payment is $2,612, just $18 shy of the all-time high set in May. High housing costs are dampening home buying demand, with mortgage-purchase applications falling to a 28-year low.
Prices are rising due to a supply shortage: The total number of homes on the market is down 18% year over year, the biggest decline since February 2022. New listings are down 9% as many homeowners refuse to part with relatively low mortgage rates. But there are still more buyers than sellers in much of the country.
"The market is marching on, especially for turnkey homes," said Chicago Redfin Premier agent Niko Voutsinas. "If folks can figure out a way to buy instead of rent, they will. Some buyers are cutting back on other expenses to up their housing budgets because they believe home prices are only going to increase. They're nervous that the minute rates come down, a flood of competition will edge them out. Those buyers typically need to move quickly and offer at or above the asking price if they love a home, because so few listings are hitting the market."