{"id":76682,"date":"2023-08-24T02:00:32","date_gmt":"2023-08-24T09:00:32","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=76682"},"modified":"2023-08-23T12:49:30","modified_gmt":"2023-08-23T19:49:30","slug":"housing-market-update-high-mortgage-rates-buyers-lose-purchasing-power","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/housing-market-update-high-mortgage-rates-buyers-lose-purchasing-power\/","title":{"rendered":"Housing Market Update: A Homebuyer on a $3,000 Budget Has Lost $71,000 in Purchasing Power Since Last Year As Mortgage Rates Hit 20-Year High"},"content":{"rendered":"<p><i><span style=\"font-weight: 400;\">Daily average mortgage rates are sitting at 7.4%, close to their highest level in more than two decades. High rates, combined with high home prices, have pushed home-purchase applications to their lowest level since 1995. <\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Historically high mortgage rates are cutting into buyers\u2019 budgets. A homebuyer on a $3,000 monthly budget, for instance, can afford a $429,000 home with a 7.4% mortgage rate, roughly the <\/span><a href=\"https:\/\/www.mortgagenewsdaily.com\/mortgage-rates\/30-year-fixed\"><span style=\"font-weight: 400;\">daily average<\/span><\/a><span style=\"font-weight: 400;\"> on August 23. That buyer has lost $71,000 in purchasing power since August 2022, when they could have bought a $500,000 home with an average rate of about 5.5%.\u00a0 <\/span><\/p>\n<p><iframe id=\"datawrapper-chart-FEIwf\" style=\"width: 0; min-width: 100% !important; border: none;\" title=\"How much home can you buy on a variety of fixed monthly payments as mortgage rates change?\" src=\"\/\/datawrapper.dwcdn.net\/FEIwf\/6\/\" height=\"600\" frameborder=\"0\" scrolling=\"no\" aria-label=\"Interactive line chart\"><\/iframe><script type=\"text\/javascript\">!function(){\"use strict\";window.addEventListener(\"message\",function(a){if(void 0!==a.data[\"datawrapper-height\"])for(var e in a.data[\"datawrapper-height\"]){var t=document.getElementById(\"datawrapper-chart-\"+e)||document.querySelector(\"iframe[src*='\"+e+\"']\");t&&(t.style.height=a.data[\"datawrapper-height\"][e]+\"px\")}})}();\n<\/script><\/p>\n<p><span style=\"font-weight: 400;\">The daily average 30-year mortgage rate was 7.36% on August 23, down slightly from a peak the day before but still close to its highest level in more than 20 years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To look at affordability another way, the monthly mortgage payment on the typical U.S. home, which costs about $380,000, is roughly $2,700 with a 7.36% mortgage rate. The monthly payment would be $400 lower\u2013around $2,300\u2013with last year\u2019s 5.5% rate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The combination of high monthly mortgage payments and <\/span><a href=\"https:\/\/www.redfin.com\/news\/housing-turnover-decline-since-pandemic\/\"><span style=\"font-weight: 400;\">historically low<\/span><\/a><span style=\"font-weight: 400;\"> housing inventory has pushed many would-be homebuyers out of the market. Home-purchase applications dropped to their <\/span><a href=\"https:\/\/www.mba.org\/news-and-research\/newsroom\/news\/2023\/08\/23\/mortgage-applications-decrease-in-latest-mba-weekly-survey\"><span style=\"font-weight: 400;\">lowest level<\/span><\/a><span style=\"font-weight: 400;\"> in nearly 30 years during the week ending August 18, and Redfin\u2019s Homebuyer Demand Index\u2013a measure of requests for home tours and other buying services from Redfin agents\u2013was down 7% year over year. <\/span><\/p>\n<p>\u201cThe buyers out there right now are the ones who need to move,\u201d said <a href=\"https:\/\/www.redfin.com\/city\/14240\/AZ\/Phoenix\">Phoenix<\/a> Redfin <a href=\"https:\/\/www.redfin.com\/premier\">Premier<\/a> agent <a href=\"https:\/\/www.redfin.com\/real-estate-agents\/kimberly-lotz\">Kim Lotz<\/a>. \u201cI\u2019m working with one couple from out of state who are coming to Phoenix because of a job transfer; they don\u2019t have the luxury of waiting for mortgage rates to come down.\u201d<\/p>\n<p><span style=\"font-weight: 400;\">There\u2019s more demand in some parts of the country than others. In <a href=\"https:\/\/www.redfin.com\/city\/13415\/TN\/Nashville\">Nashville, TN<\/a>, for instance, Redfin <a href=\"https:\/\/www.redfin.com\/premier\">Premier<\/a> agent <a href=\"https:\/\/www.redfin.com\/real-estate-agents\/kristin-sanchez\">Kristin Sanchez<\/a> says there are more buyers than sellers.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cSome buyers are hoping they can get a home for under asking price to make up for high interest rates because they\u2019re hearing the housing market is slow. But what\u2019s happening nationally isn\u2019t necessarily true here,\u201d Sanchez said. \u201cTennessee is a hot spot for people relocating from other states. There are plenty of jobs, and the area is starving for inventory. So despite high rates, there are more house hunters than houses for sale. Homes that are priced competitively and in good condition are typically selling at or just over asking price with two or three offers.\u201d<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Leading indicators of homebuying activity:<\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The daily average 30-year fixed mortgage rate was <\/span><a href=\"https:\/\/www.mortgagenewsdaily.com\/mortgage-rates\/30-year-fixed\"><span style=\"font-weight: 400;\">7.36%<\/span><\/a><span style=\"font-weight: 400;\"> on August 23, close to its highest level in more than 20 years. For the week ending August 17,\u00a0 the average 30-year fixed mortgage rate was <\/span><a href=\"https:\/\/www.freddiemac.com\/pmms\"><span style=\"font-weight: 400;\">7.09%<\/span><\/a><span style=\"font-weight: 400;\">, the highest level in more than 20 years.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mortgage-purchase applications during the week ending August 18 <\/span><a href=\"https:\/\/www.mba.org\/news-and-research\/newsroom\/news\/2023\/08\/09\/mortgage-applications-decrease-in-latest-mba-weekly-survey\"><span style=\"font-weight: 400;\">declined 5%<\/span><\/a><span style=\"font-weight: 400;\"> from a week earlier, seasonally adjusted. Home-purchase applications dropped to their lowest level since 1995. Purchase applications were down 30% from a year earlier.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The seasonally adjusted Redfin Homebuyer Demand Index\u2013a measure of requests for tours and other homebuying services from Redfin agents\u2013was down about 2% from a month earlier. It was down 7% from a year earlier, the biggest decline since April.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Google searches for \u201c<\/span><a href=\"https:\/\/trends.google.com\/trends\/explore?date=today%205-y&amp;q=homes%20for%20sale#cmpt=q\"><span style=\"font-weight: 400;\">homes for sale<\/span><\/a><span style=\"font-weight: 400;\">\u201d were down 7% from a month earlier during the week ending August 19, and down about 14% from a year earlier.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Touring activity as of August 20 was up 2% from the start of the year, compared with a 6% <\/span><i><span style=\"font-weight: 400;\">decrease<\/span><\/i><span style=\"font-weight: 400;\"> at the same time last year, according to home tour technology company <\/span><a href=\"https:\/\/www.showingtime.com\/impact-of-coronavirus\/\"><span style=\"font-weight: 400;\">ShowingTime<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<\/ul>\n<p><i><span style=\"font-weight: 400;\">Editor\u2019s note: This report excludes the national housing-market data we typically report on every week, including prices, pending sales and listings. An <\/span><\/i><a href=\"https:\/\/www.redfin.com\/news\/mls-outage\/\"><i><span style=\"font-weight: 400;\">outage<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> impacted several multiple listing services in various parts of the country during the second week of August; as a result, we are unable to accurately report on our typical housing-market metrics at this time.\u00a0<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Daily average mortgage rates are sitting at 7.4%, close to their highest level in more than two decades. High rates, combined with high home prices, have pushed home-purchase applications to their lowest level since 1995. Historically high mortgage rates are cutting into buyers\u2019 budgets. A homebuyer on a $3,000 monthly budget, for instance, can afford [&hellip;]<\/p>\n","protected":false},"author":13153,"featured_media":76683,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[8,615],"tags":[32,625,623],"dashboard":[],"coauthors":[124],"class_list":["post-76682","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-market-news","category-weekly-market-update","tag-housing-market-tracker","tag-housing-market-update","tag-national"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.7 (Yoast SEO v27.6) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Housing Market Update: A Homebuyer on a $3,000 Budget Has Lost $75,000 in Purchasing Power Since Last Year<\/title>\n<meta name=\"description\" content=\"Daily average mortgage rates are sitting close to 7.4%, near their highest level in more than two decades. 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