Rising costs deter buyers
Affordability remains a major challenge, with mortgage rates hovering near 7% and home prices up 4.8% year over year. The median monthly mortgage payment now stands at $2,753, just shy of the record high reached in April 2024. The combination of high borrowing costs and elevated home prices has led to a 9.4% decline in pending home sales compared to last year, marking the steepest drop since September 2023.
Additionally, extreme weather conditions – including severe winter storms in the Midwest, South, and Northeast, as well as wildfires in Southern California – have contributed to a slowdown in buyer activity.
Market outlook
Despite current conditions, the housing market may see increased activity in the coming weeks as mortgage rates slightly decrease and new listings rise, Redfin noted. Some Redfin agents report that buyers who had been waiting for lower prices and interest rates are now entering the market.
“Prospective buyers have been cautious because they’ve seen homes sitting on the market and they’ve heard interest rates and prices may drop,” said Jordan Hammond, a Redfin Premier agent in Raleigh, North Carolina. “Now it’s pretty clear that sellers aren’t slashing asking prices and mortgage rates aren’t plummeting, so mindsets are shifting.”
While some markets are seeing price declines, such as San Francisco and Austin, others, including Pittsburgh and Milwaukee, have recorded double-digit percentage increases in median sale prices. Additionally, new listings have risen in several metro areas, including San Jose, Phoenix, and Seattle.
