Housing Demand Outweighs Supply as Home Prices Continue to Rise

While mortgage rates continue to inch down from their recent peak, overall housing affordability isn’t improving at a rapid pace, according to a new report from Redfin. With the median U.S. home-sale price up 4.5% year-over-year during the four weeks ending September 3 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 continuing to dampen homebuying demand, with mortgage-purchase applications falling to a 28-year low.

Prices are rising due to a supply shortage, as the total number of homes on the market is down 18% year-over-year, representing the biggest decline since February 2022. New listings are also down 9% as many homeowners refuse to part with relatively low mortgage rates. However, there are still more homebuyers than sellers in much of the country.

"Some buyers are cutting back on other expenses to up their housing budgets because they believe home prices are only going to increase, said Chicago Redfin Premier agent Niko Voutsinas. "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.”

Leading Indicators of Homebuying Demand and Activity

Daily average 30-year fixed mortgage rate:

Value (if applicable): 7.33% (Sept. 6)

Recent change: Down from a peak of 7.49% two weeks earlier

Year-over-year change: Up from 6.12%

Source: Mortgage News Daily

Weekly average 30-year fixed mortgage rate:

Value (if applicable): 7.18% (week ending August 31)

Recent change: Down slightly from 7.23% a week earlier

Year-over-year change: Up from 5.66%

Source: Freddie Mac

Mortgage-purchase applications (seasonally adjusted):

Recent change: Down 2% from a month earlier

Year-over-year change: Down 28%

Source: Mortgage Bankers Association

Redfin Homebuyer Demand Index (seasonally adjusted):

Recent change: Down 3% from a month earlier (as of the 4 weeks ending Sept. 3)

Year-over-year change: Down 6%

Source: Redfin Homebuyer Demand Index

Google searches for “home for sale”:

Recent change: Down 11% from a month earlier (as of Sept. 5)

Year-over-year change: Down 16%

Source: Google Trends

Home touring activity:

Recent change: Down 16% from the start of the year, same as last year’s decline (as of Sept. 4)

Source: ShowingTime

Metro-level Highlights for the Four Weeks Ending Sept. 3

Metros with biggest year-over-year increases in median sale price:

1. Newark, NJ (16.3%)
2. Miami (16.3%)
3. Anaheim, CA (12.8%)
4. San Diego (11.2%)
5. Montgomery County, PA (11.1%)

Metros with biggest year-over-year declines in median sale price:

1. Austin, TX (-6%)
2. Fort Worth, TX (-2.5%)
3. Phoenix (-2.2%)
4. Portland, OR (-1.1%)
5. San Antonio, TX (-1%)

Metros with biggest year-over-year increases in new listings:

1. Milwaukee (3.9%)
2. San Jose, CA (3.6%)
3. Pittsburgh (3.2%)

Metros with biggest year-over-year declines in new listings:

1. Atlanta (-30.9%)
2. Las Vegas (-26.4%)
3. Riverside, CA (-21.2%)

“The market is marching on, especially for turnkey homes,” said Voutsinas. “If folks can figure out a way to buy instead of rent, they will."

To read the full report, including more data, charts, and methodology, click here.