Homebuyers' Monthly Payments Up 25% to Record High
“Homebuyers feel uneasy making offers on homes with such high asking prices, but there is no better alternative” Redfin reported.
The increase in average new mortgage payments is certainly pacing higher than inflation.
The estimated monthly mortgage payment for a typical home for sale rose 25% year over year—or $388—to a record $1,931, according to a new report from real estate brokerage Redfin.
That’s based on the all-time high median asking price of $376,000 recorded during the four weeks ending Feb. 6, and an average 30-year mortgage rate of 3.69%.
Redfin Chief Economist Daryl Fairweather said in prepared remarks that movers are feeling a big pinch. “There is nowhere for them to run from increasing housing costs now that mortgage rates are rising and inflation has spread to the rental market.
“Homebuyers feel uneasy making offers on homes with such high asking prices, but there is no better alternative. Would-be homebuyers who bowed out last year are kicking themselves, but delaying purchasing a home another year could be a costly mistake.
“My advice to buyers who are worried they will have to overbid in order to win a home is to make sure they can see themselves living in the home for at least five years. I expect home values to rise over that time horizon even if there are short-term fluctuations in the housing market.”
Pending Sales Up 34% Compared to Two Years Earlier
Pending sales were down slightly from the same period in 2021, but 34% higher than they were two years earlier, weeks before the pandemic began. Meanwhile, the number of homes for sale was down 29% from a year earlier and down 50% from 2020.
This constricted supply is depressing home sales, as mortgage purchase applications fell 10% during the week ending Feb. 4.
As a result, the market’s pace is accelerating. Over half (55%) of homes that found a buyer spent two weeks or less on the market—the highest rate on record for this time of year.
More Statistical Housing Trends
Over the four-week period ending Feb. 6. Redfin reported that the median home sale price was up 14% year over year to $353,750. Also, new listings of homes for sale were down 10% from a year earlier. Compared to January 2020, new listings were down 12%.
It also found that active listings (the number of homes listed for sale at any point during the period) fell 29% year over year, dropping to an all-time low of 440,000. Listings were down 50% from the same period in 2020.