Mortgage rates fell to their lowest level in two years amid the much-anticipated cut in Fed interest rates last week, leading to a marked decline in housing payments.
Although the number of mortgage applications has been picking up, home sales are yet to register a significant recovery, partly because of buyer indecision and the political climate.
“Buyers are holding their breath, watching interest rates. There’s pent-up energy, with people waiting for the right moment to buy a home—and it’s feeling like the dam is going to break soon,” Kristin Sanchez, a Redfin premier agent, said. “Once things are more settled and people know where mortgage rates are going to land and who is going to be president, the market is going to get busier. I think winter will be busier than summer, which is the opposite of a usual year.”
The Federal Reserve slashed interest rates by half a percentage point to a range of 4.75 percent to 5 percent on Sept. 18. It was the first rate decrease in four years.
Redfin reported pending sales—properties on which offers have been accepted—at 75,933, for the four weeks ending on Sept. 15, 2024. This is a nearly 7 percent year-on-year decline.
There were 88,196 new listings, up by 5.1 percent year over year, and 998,854 active listings, which increased by 16.1 percent, according to the brokerage.
The monthly supply stood at 3.9 months. Although this is the highest level since February, a four-to-five-month supply is considered “balanced,” indicating a current shortage of units in the market.
Sales of Existing Homes Fall
Existing-home sales fell in August, based on a recent report by the National Association of Realtors (NAR).Total existing-home sales, including single-family homes, townhomes, condominiums, and co-ops, went down by 2.5 percent last month compared with July, to a seasonally adjusted annual rate of 3.86 million. Except for the Midwest, all other U.S. regions registered a decline.
“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” NAR Chief Economist Lawrence Yun said. “The home-buying process, from the initial search to getting the house keys, typically takes several months.”
The housing market and mortgage rates have turned into a key issue in the 2024 presidential election.
Vice President Kamala Harris has said she plans to address the ongoing housing affordability crisis through the building of 3 million rental units and homes and giving first-time homebuyers up to $25,000 in down payment assistance.
“Vice President Harris knows that a home is more than a house—it represents financial security and an opportunity to build intergenerational wealth. But for too many Americans, homeownership is too far out of reach,” her campaign policy page states.
Former President Donald Trump has suggested a different approach to resolving the issue.
In his speech at the Republican National Convention in July, he said his focus would be to make homes more affordable for buyers by driving down inflation, thereby reducing mortgage rates and encouraging a positive impact on home prices across the country.
