House Hunters Are Back as Mortgage Payments Decline First Time in 4 Years

Residential property buyers are reentering the market, encouraged by the recent decline in mortgage payments and rates, according to real estate brokerage firm Redfin.
Redfin attributed this fall to declining mortgage rates that have dropped to 6.5 percent—the lowest level in 15 months. Since the beginning of August, rates have been holding steady at this level, attracting buyers to the market, the report said.
“Some would-be buyers who had been waiting for rates to decline more have realized that’s unlikely to happen anytime soon, and others are gaining confidence that rates won’t suddenly pop up before they put an offer on a home.”
Redfin’s Homebuyer Demand Index, which measures requests for home tours and other buying services, increased by 4 percent from the previous week to its highest level in two months.
Prices are rising—albeit at a slower pace—since the housing shortage continues to afflict the market.
“There aren’t enough sellers listing their homes to cause prices to fall and there aren’t enough buyers to create competition to drive prices up significantly,” said Sheharyar Bokhari, a senior economist at the firm.
“Relatively low sales and gradual price increases will remain the status quo each month until one of those things changes.”
Gregory Eubanks, a Redfin agent in Los Angeles, California, said that clients have been getting more excited about buying or selling a home over the past two weeks. He attributed this change partly to speculation that the U.S. Federal Reserve would cut its benchmark interest rates in September.
Some people are still waiting for mortgage rates to drop further to make a move in the market, he said.
“The only sustainable way to effectively tame high housing costs is to implement policies that allow builders to construct more attainable, affordable housing,” said NAHB Chairman Carl Harris.
Robert Dietz, chief economist at the organization, expects builder sentiment to improve over the coming months, pointing to mortgage rates falling “markedly” in the second week of this month and potential Fed rate cuts ahead.
“In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market. Now, the 30-year fixed-rate hovers around 6.5 percent and will likely trend down in the coming months as inflation continues to slow. Lower rates are good news for potential buyers and sellers alike,” he said.