Home-sale prices fell nationwide last month for the first time in more than three years, as high mortgage rates squeezed already weak demand, while rents moved in the opposite direction, rising for the first time in just as long. The median home-sale price was $389,601 in the four weeks ending October 25, down 0.1 percent from a year earlier, said real estate brokerage Redfin. It is such a modest decline that it is not likely to tilt the scales for would-be buyers discouraged by higher prices.
However, it is a dramatic reversal for the U.S. housing market, where home price growth until now seemed only able to slow down but not to be halted. This is a hollow victory for American buyers. On one hand, lower prices offer some improvement in affordability, which has long been strained.
According to Redfin, 21.5 percent of homes for sales in the four weeks ending October 25 had their asking price slashed by sellers, up from 20.9 percent a year earlier. On the other hand, prices are falling because buyers’ demand has plunged further down after mortgage rates climbed back above 7 percent last month, making homeownership even more expensive than it was at the beginning of the year. The median mortgage payment was $2,786 in the week ending October 25; this is up 10.7 percent year-over-year to the highest level in Redfin’s record except the previous week, when mortgage rates averaged even higher.
As of October 29, the latest data made available by Freddie Mac, the 30-year fixed-rate mortgage averaged 7.24 percent, down from 7.32 percent the previous week and 6.17 percent a year earlier. Despite this recent decline, the 30-year fixed-rate mortgage, the most popular home loan among American borrowers, was still near a three-year high. This was driven up by high inflation and the Federal Reserve’s attempt to fend off further increases in the cost of living by rising interest rates.
These higher costs are contributing to the deep freeze the U.S. housing market has experienced since the start of the year, which experts have described to Newsweek as a state of "hibernation" that is frustrating American voters. And things could get worse in the coming weeks, after Election Day. Pending home sales, which offers an indication of how the housing market will fare in the coming months, fell 1.8 percent from a week earlier on October 25 to the lowest level in records dating back to 2021.
For the third week in a row, pending sales declined in all 50 of the most populous U.S. metro areas, according to Redfin. Redfin said these metros saw the biggest year-over-year home price declines last month: Seattle also saw the biggest decline in pending home sales in the country, down 31.6 percent year-over-year in October. It was followed by Atlanta with -25.9 percent, San Diego with -25.3 percent, Las Vegas with -22.7 percent, and Denver with -22.3 percent.
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