House Hunters Stayed on Sidelines As Rates Dipped Below 6%

High prices and economic uncertainty kept demand muted; now, rates are already rising again and global tensions could add to homebuyer hesitation. 

The median monthly housing payment was $2,591 during the four weeks ending March 1, down 2.8% year over year. 

Payments are falling largely thanks to the weekly average mortgage rate dropping to 5.98% last week, down from 6.76% a year earlier and the first time it has dipped below 6% in three and a half years. (The daily average mortgage has risen from 5.99% last week to 6.07% on March 4.) On the other side of the housing payment equation, the median home-sale price rose 1% year over year to $381,750.

Prices are rising because despite slow homebuying demand, inventory is declining. Pending home sales fell 2.8% year over year. Meanwhile, new listings declined 1.2% and the total number of homes for sale dropped 1.9%, the biggest decline in over two years. While there are more home sellers than buyers in the market, there are still a limited number of desirable homes for sale, which creates competition for those desirable homes and modestly pushes up prices. 

“Neighborhoods that have always been popular are just as popular with homebuyers,” said Mike DeMello, a Redfin Premier agent in Oahu, HI. “Move-in ready, single-family homes in those popular areas are attracting multiple offers, just like they always have. But neighborhoods that are typically slow are extra slow, and average neighborhoods are slower than usual. My advice for sellers in those places that aren’t red-hot: Don’t overprice, because if your home sits on the market for longer than a few weeks, it’ll probably sit on the market for months and eventually sell for a lower price.”

Overall, homebuying demand in much of the country is tepid because even though housing payments have declined, they’re still historically high; mortgage rates are still double pandemic-era lows. Some would-be buyers are also hesitant due to economic uncertainty, with many feeling jittery about stock-market volatility and the back-and-forth on tariffs. 

Redfin Economists, Agents Say Impact of Iran War Likely to Be Small

The evolving conflict in Iran may also affect homebuying sentiment, though it’s too soon to tell how much. 

“Last week, Americans were hit with headlines about mortgage rates dropping below 6%, which provided some hope. But over the weekend, those headlines were replaced with ones about the war in the Middle East,” said Chen Zhao, Redfin’s head of economics research. “The war could make some would-be buyers think twice, much in the same way economic and global uncertainty have been turning off buyers for the last year, and it’s likely to cause short-term volatility in mortgage rates. But the war’s impact on the economy will mostly be felt in oil markets, which are unlikely to have a big impact on mortgage rates or demand unless the conflict goes on much longer than expected.”   

A Washington, D.C. Redfin agent reports one buyer is putting purchasing plans on hold due to uneasiness about tensions in Iran. But Redfin agents in several other places with large military populations, including San Diego and San Antonio, haven’t yet heard homebuyers or sellers bring up the Iran conflict. 

There are a few bright spots this week when it comes to demand. Mortgage-purchase applications are up 6% week over week. And many Redfin agents, including DeMello in Oahu, expect this spring’s homebuying season to be stronger than last year’s. 

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page. 

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