Real estate technology company Redfin is warning and informing Americans looking to buy a home about a key trend in the housing market.
Home prices continue to rise, mortgage rates are a factor, affordability is a constraint, and the reasons why people who want to buy homes are influenced by major factors.
“Despite the sluggishness of the overall housing market, home-price growth is proving to be surprisingly resilient,” Redfin’s head of economics research Chen Zhao said on August 18.
“That’s partly because today’s market is split in two: Many everyday buyers are constrained by affordability challenges,” Zhao continued. “Wealthy buyers have the means to keep competing for desirable homes. That upper-end strength is helping prop up prices even as the broader market cools, giving buyers some bargaining power.”
On a seasonally adjusted basis, U.S. housing prices edged up 0.27% in July, matching the virtually flat pace of 0.28% seen in June, according to Redfin.
“Prices rose 3.4% from a year earlier, the fastest annual growth in a year,” Redfin wrote.
Mortgage rates clock in at 6.72%
On August 19, the daily 30-year fixed-rate mortgage (FRM) was 6.72%, Mortgage News Daily reported.
On a weekly basis, the FRM was 6.67%, according to Freddie Mac.
“Mortgage rates dropped on Wednesday due to a combination of lower oil prices and the announcement of changes to Treasury’s bond buyback program,” Mortgage News Daily’s Matthew Graham wrote.
“The oil price angle is easy to understand,” Graham added. “Throughout the war, higher fuel prices have caused volatility in inflation expectations and inflation is a critical consideration for bonds [and] rates.”
Mortgage News Daily explains Treasury buyback details
Graham clarifies his belief that the treasury buyback news is complicated, but he outlines the details he says are the ones that matter.
- The original buyback program began in 2024 during President Joe Biden’s administration when Janet Yellen served as the Treasury secretary.
- The initiative is not quantitative easing or the creation of new money. The U.S. Department of the Treasury sources funding by issuing bonds or collecting federal receipts, such as taxes and tariffs.
- President Donald Trump’s administration and Treasury Secretary Scott Bessent continued and expanded the program.
- The department’s latest announcement increases the volume of long-term U.S. Treasury bonds that can be repurchased during scheduled buying operations.
- The primary objective is to foster smooth, stable financial market operations, though it delivers indirect benefits to specific interest rates.
- Because the recent expansion targets longer-term Treasury bonds, longer-term yields experienced the sharpest declines, whereas short-term rates ticked upward since funding additional long-term bond purchases inherently reduces short-term bond allocations, all else being equal.
- (Source: Mortgage News Daily)
Redfin reports mortgage rate, homebuyer struggles
Stagnant housing prices directly mirror the current supply and demand shifts in the market.
“Buyers are still contending with high housing costs — including mortgage rates that have sat in the mid-to-high 6% range all summer — which is keeping a lid on demand,” Redfin wrote. “At the same time, there are hundreds of thousands more sellers than buyers in the market, which caps price growth.”
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“Still, the slowdown is very modest: Home prices are still rising, and they’re rising at only a marginally slower pace than they were late in the spring.”
Redfin also identifies what it believes is a big reason for the current housing market dynamics.
Image source: Shutterstock/TS
Luxury housing market drives real estate developments
Robust activity in the luxury sector helps sustain overall price growth even as broader buyer demand slumps.
“Luxury home prices are rising faster than non-luxury prices,” Redfin wrote. “Wealthy homebuyers are having an outsized impact on home-price growth, especially in affluent markets like the Bay Area and South Florida.”
“San Francisco and Oakland, Calif. lead the nation in price growth, and West Palm Beach, Fla. comes in fourth.”
There were some declines in home prices, particulary in Texas and Arizona.
“The biggest year-over-year declines were in Texas,” Redfin wrote. “San Antonio (-2.1%) is first, followed by Fort Worth (-1.3%), Dallas (-1%), Austin (-1%) and Phoenix (-0.9%).”
“Prices are falling in those places because in each of them, there are roughly twice as many sellers as buyers. That leads sellers to price lower to attract house hunters and, in some cases, buyers are able to negotiate prices down.”
Related: Zillow predicts major mortgage rate, housing market change