Report outlines reasons behind rising costs
The median monthly housing payment in the US has come close to matching its historic peak, reaching $2,686 for the four weeks ending on March 10.
According to a new report from Redfin, the monthly median is now only $30 less than the record high set last October, when mortgage rates shot above 7%.
The report attributed this near-record level of housing costs to persistently high mortgage rates, coupled with increasing prices.
Mortgage rates have dropped slightly after a continuous four-week rise, but they are still hovering close to 7%.
At the same time, nationwide sale prices increased 5% from the previous year. And for the first time since July 2022, all 50 of the largest US metropolitan areas experienced price hikes.
Redfin said the high cost of housing has continued to sideline some potential buyers, citing a 6% decrease in pending sales compared to the previous year.
However, there has been an increase in mortgage-purchase applications for two consecutive weeks as buyer activity surged due to an improvement in housing supply.
There has been a 13% increase in new listings, which is the largest year-over-year rise in nearly three years.
Redfin also reported a 3% increase in the total number of homes for sale, marking the most significant expansion in nine months.
Rate cuts unlikely, but uptick in listings should motivate buyers
Chen Zhao, Redfin’s economic research lead, commented on the current state of the housing market and said rate cuts aren’t likely to happen in the near future.
“Mortgage rates are likely to stay high a little longer than expected, with the latest inflation report essentially eliminating any chance of the Fed cutting interest rates before June,” she said.
Zhao advised buyers in a position to proceed with their home searches to act with a sense of urgency, as housing costs are not expected to decrease soon.
“The uptick in listings should be another motivator for buyers: There’s more to choose from, and improving inventory may bring out more competition from other buyers as we get further into spring,” she said. “Some buyers have already gotten the memo, with mortgage applications finally increasing after weeks of declines.”
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