Mortgage Payments Decline in 12 US Metros Amid Easing Rates, Lower Home Prices: Redfin

Home buying and selling remained sluggish last month due to affordability challenges, NAR’s chief economist said.

A for-sale sign displayed in front of a home in Miami on Feb. 22, 2023. Joe Raedle/Getty Images

Monthly mortgage payments fell year over year in 12 of the 50 most populous U.S. metro areas in March, with most of the declines occurring in Texas or Florida, real estate brokerage Redfin said in an April 30 statement.

The decline in mortgage payments in the 12 metro areas was mainly because “mortgage rates declined and local home-sale prices either declined or stayed flat,” the brokerage said.

The average 30-year fixed-rate mortgage was at 6.65 percent in March, down from 6.82 percent a year ago. As for sales price, the median price fell or remained flat in nine out of the 12 metros.

“Prices came down in those places because demand has slowed,” Redfin said.

The demand decline has been attributed to “widespread economic instability.” Half of the 12 metros that saw monthly mortgage payments decline were either in Florida or Texas.

The metro with the largest year-over-year dip in mortgage payments was Jacksonville, Florida, which saw payments drop by 4.2 percent to $2,482. Bay Area, San Francisco, and Oakland, California, were next on the list.

Ali Mafi, a Redfin Premier agent in San Francisco, said now is the best time for prospective buyers to shop for a home.

“Buyers are having luck negotiating because many of the people who need to sell now—those who are relocating, for example—are anxious and eager to sell quickly, before the economy potentially gets even more uncertain.”

Despite the drop in mortgage payments last month, existing home sales slipped 5.9 percent in March on a monthly basis, the National Association of Realtors (NAR) said in an April 24 statement.

Housing inventory at the end of March was up 8.1 percent from February and almost 20 percent from a year ago, suggesting more homes are sitting unsold in the market.

“Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” NAR Chief Economist Lawrence Yun said. “Residential housing mobility, currently at historical lows, signals the troublesome possibility of less economic mobility for society.”

Mortgage Rate Challenge

Mortgage rates have remained elevated for a prolonged period, dissuading potential buyers from committing to a home purchase.

Since the beginning of the year, the average weekly rate on a 30-year fixed-rate mortgage has remained above the 6.5 percent level. Since around September 2022, rates have consistently been above 6 percent.

According to an April 24 statement from Sam Khater, chief economist at Freddie Mac, rates have fluctuated by less than 20 basis points over the past couple of months. He said this stability “continues to bode well for buyers and sellers alike.”

Lisa Sturtevant, chief economist at real estate data company Bright MLS, said in an April 24 commentary that the week-to-week stability in rates masks the “underlying volatility” in the bond market occurring amid rising economic uncertainty.

“As broader economic conditions have become more uncertain, many expected that mortgage rates would come down,” she wrote. “That’s because when the economy weakens, investors are attracted to U.S. Treasury bonds as a safe place to put their money, leading to a drop in bond yields. Mortgage rates tend to follow bond yields, so they would likely fall as well.”

Sturtevant said conditions have not developed as expected.

“Bond yields have been moving sharply up and down in response to uncertainty about broad-based tariffs and potential global economic impacts. Investors may be less sure that U.S. bonds are the ‘safe-haven’ investment that they historically have been, which means bond yields could rise,” she said.

She predicts mortgage rates to “jump around” over the coming months.

For mortgage rates to drop in any significant manner, the Federal Reserve’s benchmark interest rates may have to come down substantially.

The annual personal consumption expenditure price index, the Fed’s preferred measure of inflation, dipped sharply in March to 2.3 percent from the previous month’s 2.7 percent.

Central banks could reduce rates when inflation is cooling down to boost economic activity.

The Fed had pushed down interest rates last year in a bid to combat inflation but has not implemented any rate cuts for this year so far.

A decision on whether to cut rates or keep them unchanged will be made at the agency’s next meeting, scheduled for May 6–7.