The median home sale price in the United States has fallen for the first time in over three years, and home demand has fallen to a new low.
For the four weeks ending Oct. 25, the median home sale price was $389,601, down 0.1 percent year on year, real estate brokerage Redfin said in an Oct. 29 report, adding that this four-week period marked the first annual decline in more than three years.
Prices declined for the second consecutive week, following a 0.2 percent dip the week before.
Median home prices for an average U.S. home fell amid high costs and easing demand, the brokerage said.
Pending home sales, a leading indicator of existing home sales and a measure of homebuying demand, fell from the week before to their lowest level since 2021. Pending sales fell in all 50 of the most populous U.S. metro areas for the third straight week.
Meanwhile, the median mortgage payment was $2,786, the second-highest level on Redfin’s record. High costs come as mortgage rates remain elevated.
The average weekly rate on a 30-year fixed-rate mortgage was 7.24 percent for the week ending Oct. 28. While down from the 7.4 percent high hit in early October, it remains well above the less-than-6 percent level in late February. Persistently high mortgage rates have contributed to high housing costs.
According to Redfin, despite high housing costs and easing homebuying demand, the total supply of homes for sale is gradually increasing.
“The total number of homes for sale ticked up 0.3 percent from a week earlier. Even though new listings are falling, pending sales are falling more, keeping the pool of inventory partly filled,” the report said.
“There are hundreds of thousands more home sellers than buyers nationwide, giving buyers more negotiating power than they’ve had in over a decade.”
Meanwhile, smaller homes are becoming a more popular choice with buyers amid affordability issues.
In September, smaller and more affordable housing units made up a larger share of total new home sales, according to an Oct. 27 research report from real estate marketplace Zillow.
About 70 percent of new homes sold were priced below $500,000.
“As elevated mortgage rates keep buyers on the sidelines, the share will likely continue to rise. By comparison, 66 percent of new homes sold were below this price point in September last year,” Zillow said.
Tackling Affordability Issues
In an Oct. 27 statement, the National Association of Home Builders (NAHB) raised concerns that affordability issues are negatively affecting new home sales.
Bill Owens, NAHB chairman, said in the statement that “builders continue to offer incentives and adjust pricing to attract buyers, but elevated mortgage rates and high home prices are limiting the number of households that can afford to purchase a home.”
Danushka Nanayakkara-Skillington, NAHB assistant vice president for forecasting and analysis, suggested that sustained improvements in housing affordability and mortgage rates would help in maintaining housing demand.
On Oct. 22, President Donald Trump
an executive order to lower housing costs in the United States.
The order directed multiple officials, including the Director of the Federal Housing Finance Agency, to create a test program to automatically cancel private mortgage insurance payments for certain homeowners once they build enough equity in their homes.
This is expected to help some homeowners avoid paying high insurance costs each month.
The order asked federal Agriculture and Veterans Affairs secretaries to reduce the interest rates charged on loans their departments issue for single-family homes.
Moreover, the order directed the Task Force on Manufactured Housing Innovation to streamline regulatory and permitting burdens associated with building manufactured homes.
“The American Dream of homeownership is a vital pillar of our great country,” the order said.
“It is the policy of my Administration to reduce regulatory barriers to mortgage origination and costs impeding homeownership.”
