The US real estate brokerage firm Redfin released a report on Thursday (April 24th) stating that as of the past four weeks ending on April 20, the median sales prices of homes in 11 out of the 50 most densely populated metropolitan areas in the US have seen a year-over-year decrease. This follows a similar trend back in September 2023 when the prices in the same number of urban areas experienced a decline.
According to the brokerage firm, “Many major metropolitan areas are seeing a decline in home prices, national home price growth is slowing down as many homebuyers are pulling back. However, the inventory of homes for sale remains stable.”
Redfin’s agents across the country reported that “home viewing activities have slowed down, mortgage applications for home purchases have decreased, and potential buyers are extremely cautious due to high home prices and widespread economic uncertainties.”
The city of San Antonio, Texas saw the largest decline at 3.7%, followed by Oakland, California (3.5%) and Jacksonville, Florida (2.2%).
New listings saw a year-over-year increase of 9.6%, driving inventory up.
However, the median monthly housing payment stands at $2,848, only $8 lower than the historical peak. Additionally, mortgage rates rose from 6.62% to 6.83% in just one week. The combination of these factors is causing buyers to hesitate.
Redfin attributes the increase in mortgage rates to rising economic recession risks and economic instability, which are also hindering potential buyers.
The company’s agents report that most of the current real estate market activities are driven by sellers.
Redfin’s Chief Economic Researcher, Chen Zhao, stated, “Regardless of what’s happening in the world, there will always be people needing to buy or sell a home, but given the current economic uncertainties, now is more critical than ever for buyers and sellers to formulate their strategies… Sellers should price their homes reasonably according to market changes; they may need to sell quickly and avoid concessions by possibly pricing lower than initially expected, while buyers should negotiate on prices and terms and compare more widely than usual to secure the best mortgage rates.”
Real estate platform Zillow, in a statement released on April 18, projected a 1.9% decline in home prices this year. This forecast is a significant downward adjustment compared to the company’s previous expectation of a 0.6% increase.
Zillow believes the combination of high mortgage rates and increasing housing supply signals a potential decline in home prices by the end of the year.
The statement mentions, “With the increasing supply, buyers have more choices and decision time, while sellers are attracting buyers with record price cuts.”
According to data from Freddie Mac, the average weekly rate for a 30-year fixed-rate mortgage has ranged between approximately 6.5% to 7% for some time.
Sam Khater, Chief Economist at Freddie Mac, stated in a statement on April 24, “In the past two months, the fluctuations in the 30-year fixed-rate mortgage rate have been less than 20 basis points, and this stability is beneficial for both buyers and sellers.”
Lisa Sturtevant, Chief Economist at real estate data firm Bright MLS, wrote in a commentary on April 24 that mortgage rates may see “significant fluctuations” in the coming months.
She noted, “Buyers need to be prepared to work with lenders to lock in rates when they drop. Although some buyers may hope for rates to fall to around 6%, rates are likely to remain at least in the mid-6% range through the summer.”
Meanwhile, people are closely monitoring the decisions of the Federal Reserve to gauge potential fluctuations in mortgage rates.
The Fed has kept rates unchanged at a range of 4.25% to 4.5% so far this year. In the past three meetings, the Fed refrained from cutting rates.
President Donald Trump has been critical of Fed Chair Jerome Powell, accusing the Fed of lacking in accommodative monetary policy measures.
In a social media post on April 21st, Trump stated, “Many are calling for rate cuts” and added that if Powell does not decide to cut rates, the economy could “slow down.”
The next meeting of the Federal Open Market Committee is scheduled to take place on May 6th to 7th. According to data from the Chicago Mercantile Exchange’s FedWatch tool, the majority of rate traders do not expect a rate cut during the May meeting.