Housing Costs Shatter Records as Mortgage Rates and Home Prices Soar

A new report from Redfin shows the median monthly housing payment climbing 11% year over year to an all-time high of $2,747.

The report highlights housing market data for the four weeks ending April 7, 2024. Housing payments are rising because home prices and mortgage rates are both high. And Wednesday's (April 10) hotter-than-expected inflation report hasn't helped.

Wednesday's report shows a 0.4% month-over-month increase in core inflation (and a 3.8% increase year over year), which is the same as the previous month but higher than the expected 0.3% (3.7% year over year).

Given those numbers—along with the latest jobs report showing a stronger-than-expected economy—the Fed is unlikely to initiate cuts to the federal funds rate at the next FOMC meeting (April 30). More than likely, they'll hold off until July or even September.

Anticipating the Fed's caution, the 10-year treasury yield shot up to around 4.5%, and daily average mortgage rates soared to their highest level in nearly five months, gaining more than a quarter percentage point in one day.

Buyers should expect those rates to remain high for the foreseeable future. And for new homebuyers, that means a heftier monthly mortgage payment.

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.

MEDIAN HOME PRICES CONTINUE TO RISE

Mortgage rates aren't the only factor in this month's record-high monthly payments.

The median home sale price rose 4.5% year over year to $378,250—just about $5,000 under the record-high reached in June 2022.

Home prices are remaining stubbornly high because buyer demand is still high enough to keep them from falling. And while housing supply is picking up (with a 14% annual increase in new listings), inventory remains lower than typical spring levels, meaning buyers can count on competition for available homes.

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

HIGHLIGHTS FROM REDFIN'S KEY HOUSING MARKET DATA

Redfin's report includes detailed housing market data at the national and metro level for the four weeks ending April 7, 2024. Here are some of the key national highlights:

Median sale price: $378,250 - up 4.5% year over year, reflecting continued strong demand from buyers despite higher mortgage rates.

Median asking price: $410,950 - up 6.6% year over year, marking the biggest increase since October 2022. This suggests sellers are pricing their homes more aggressively to capitalize on the tight inventory.

Median monthly mortgage payment: $2,747 at a 6.82% mortgage rate - up 11.3% year over year and reaching an all-time high. This payment is based on the median home sale price and average mortgage rate during this period. (***Note: Mortgage rates shot up to 7.37% this week after the latest CPI report, further increasing costs for buyers.***)

Pending home sales: 84,323 - down 4% year over year, indicating slightly less competition among buyers compared to last year at this time.

New listings: 91,452 - up 14.1% year over year, marking the biggest increase since June 2021. More new listings provide some relief for tight inventory, though levels are still below typical spring volumes.

Active listings: 819,031 - up 8.2% year over year, another sign of inventory growth but still historically low.

Months of supply: 3.2 months - up 0.4 points year over year. A supply of 4-5 months is considered balanced, so this indicates the market is still tipped in favor of sellers overall.

Other key metrics show the market remains very competitive despite some cooling:

- 42.5% of homes went under contract within two weeks (down slightly from 44% a year ago)

- Median days on market was 37 days (just 1 day slower than last year)

- 28.4% of homes sold above list price (essentially unchanged year over year)

- Only 5.8% of listings had a price drop, though this is up 1.5 percentage points annually

The data shows significant variation between metro areas as well. Some metros like Anaheim, West Palm Beach, and Pittsburgh saw double-digit annual increases in median sale prices, while San Antonio actually declined 1.7%. San Jose, Sacramento and Austin led in new listing growth, while some Northeastern metros like Newark, Milwaukee and Chicago contracted.

For those looking to escape from New Jersey, the housing market data shows a mixed bag. While New Brunswick saw one of the biggest annual increases in median home sale price at 13.9%, Newark experienced a 3.1% decline in new listings year-over-year. This could make it more challenging for potential buyers in Newark to find their desired home. However, the higher prices in New Brunswick may deter some from relocating there. Prospective homebuyers in New Jersey should carefully evaluate their options and be prepared for competition in certain areas.