U.S. Housing Market March Recap: Rising Mortgage Rates & Home Prices Weaken Spring Buying Season

According to the April 11th, 2024, Redfin Housing Market Update, monthly payments hit a new record of $2,747 per month during the four weeks ending April 7th, rising 11% from the same time in 2023. Redfin projects continued high costs for buyers due to inflation’s effects on rising home prices and mortgage rates. Monthly house payments now exceed the previous peak of October 2023, with the average 30-year fixed-rate mortgage (FRM) standing at 8%, compared to the current 6.82%. Concerns over mortgage rates persist. According to an April Freddie Mac report, mortgage rates are moving toward 7% due to “sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path,” with the 30-year FRM averaging 6.88%. 

The median home sale price rose 4.5% year-over-year (YOY) to $378,250 with an average 30-year FMR at 6.82%, double that of pandemic-era lows. Mortgage rates continue to climb, with 30-year fixed rates having risen to 7.44%, according to an April survey from Mortgage News Daily. This surge marks the highest rate observed since mid-November last year, reflecting a substantial increase of 94 basis points from April 14th, 2023. 

This precipitous rise in mortgage rates resulted from higher-than-expected inflation reported in the April 10th, 2024, Consumer Price Index (CPI) Summary, leading to declining stocks and concerns about a lack of June interest rate cuts by the Fed. This, combined with intense buyer demand due to low inventory, has kept existing home prices high on a national level. 

That being said, it is also important to examine the new construction home market for additional insight into the current state of existing home inventory and pricing. According to the Federal Reserve Bank of St. Louis (FRED), the median price peak for new single-family construction was $496,800 in October 2022. However, as of February 2024, the median sales price stands at $400,500, having decreased by nearly $100,000 since October 2022 and reflecting a 7.6% YOY decline from February 2023. These stats show a decrease in pricing, starkly contrasting with those for existing houses, where prices are on the rise.

The main reason for the decrease in pricing of new single-family homes is their relatively high inventory level compared to that of existing homes. According to data from FRED, in February 2024, there were 463,000 brand new single-family homes for sale, the highest level since March 2008. 

Despite a 23.5% YOY increase in inventory, levels remain far below those of 2017–2019, with about 39% fewer existing houses for sale. Minimal inventory growth, compared to spring and summer 2022, coupled with higher mortgage rates, had led existing-home sellers to hold onto their properties, keeping prospective existing-home buyers sidelined and prices extremely high. Homebuyers who are not financially challenged by the pricing, taxes, and insurance associated with single-family new-home builds are choosing this route. However, overall high mortgage rates are keeping the number of new-home buyers fairly low. 

The aforementioned Redfin report cites the Fed’s decision to keep interest rates high, aimed at curbing inflation, as the cause of rising mortgage rates and monthly housing payments. Even though inflation was “hotter than expected,” the Bureau of Labor Statistics March 2024 report indicated that jobs rose by 303,000 and the unemployment rate changed little at 3.8%. Despite signs of a strong economy, these inflationary pressures persist, leading to elevated mortgage rates and existing home prices.

Redfin Economic Research Lead Chen Zhao states in the Redfin report, “For homebuyers, the latest CPI report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months.”

Redfin’s key housing market data highlights a 4.5% YOY increase in the national median sale price, reaching $378,250, while the median asking price rose by 6.5% YOY to $410,900, the highest increase since October 2022. Despite record asking prices, there’s also a three-year high in price reductions.

The Redfin Median Sale Price graph shows that the median price of existing homes sold is only $5,000 below the highs set in June 2022. While the rate of existing median home sale price increases is more aligned with 2023 than the substantial surges seen in 2022, the market is close to reaching record highs once again. However, leading homebuying indicators suggest a potential slowdown on the horizon. Notably, the Redfin Median Asking Price graph indicates a significant uptick, with the median home asking price soaring to $410,950, surpassing the previous peak of $400,000 set in 2022. These elevated prices may keep home sales low for the coming months.

Redfin’s metro-level highlights show that San Antonio, TX has the largest YOY decrease in median sale price at -1.7%, while 49 out of the 50 most populous U.S. metros have experienced gains. For example, the Anaheim, CA metro area witnessed a significant increase of 22.2%, followed by West Palm Beach, FL (17.4%), Pittsburgh (15.2%), and San Jose, CA, and New Brunswick, NJ (both at 13.9%).

Redfin’s highlights reveal a 4% YOY decrease in pending home sales to 84,323, alongside a 14.1% increase in new listings to 91,452. Despite rising listings, demand is waning, suggesting a faltering home buying market. 

While pending sales increased in 11 U.S. metros, including San Jose, CA (22.6%), San Francisco, CA (15.8%), and Cincinnati, OH (5.7%), others experienced significant decreases, such as Atlanta, GA (-15.3%), Houston, TX (-13.5%), and Nassau County, NY (-12.1%).

New listings increased YOY in markets such as San Jose, CA (56.8%), Sacramento, CA (39.2%), and Austin, TX (30.7%), while decreasing in six U.S. metros, including Newark, NJ (-3.1%), Milwaukee (-3%), and Chicago, IL (-2.9%). 

Redfin’s April 11th, 2024 Pending Sales graph depicts a 4% YOY decline to 84,323, reaching a three-year low and dropping from the previous week. This suggests forthcoming closed home sales may remain low, indicating weakening homebuying demand. During the spring homebuying season, pending listings typically rise, highlighting the current market challenges.

In the latest housing market data, Redfin reveals a mixed landscape with complete stasis, very slow gains, or outright decreases in pivotal homebuying indicators, signaling a subdued start to the spring homebuying season.  

The most positive news lies within Redfin’s New Listings of Homes graph, which shows an increase of 14.1% to 91,452, which is up by double digits YOY, although falling short of growth seen in 2021–2022. In comparison, Redfin’s Active Listings of Homes for Sale graph shows active listings remained flat compared to the previous week at 819,031, yet marked a three-year high, up 8.2% YOY.

Redfin’s Months of Supply graph shows there are 3.2 months of supply available on the market, up 0.4% YOY and at a three-year high. According to Redfin, four to five months of supply is considered balanced, with a lower number indicating a buyer-friendly market. Redfin’s Days on the Market graph shows homes sold in a median of 37 days, faster than last year but slower than the peak of 23 days seen in 2021–2022. 

Redfin’s Price Drops graph shows that 5.8% of listings saw price reductions, reaching a three-year high, while the average home sold for 99.1% of its final list price, contrasting with the 102% share in 2022 when homes sold for 2% over the asking price.

Even Redfin’s Homebuyer Demand Index graph shows homebuyer demand dipped by 6% YOY, a three-year low, reflecting affordability concerns amid high mortgage rates and rising home prices. Overall, Redfin’s data shows a marked decrease in activity, and the U.S. housing market is off to a very slow start.

“Housing costs are likely to continue going up for the near future,” Zhao says in the Redfin report, “but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs.”

In our April recap, HAVEN will take a further look at the numbers: how the current U.S. housing market is reacting to prevailing economic factors influencing real estate.