Monthly Home Payments Fell To Lowest Level in Nearly a Year: Report

What is a Non-Qualified Mortgage? — (Photo : Pexels)

The median mortgage payments in the United States fell by nearly 15% in December after peaking in October, according to a new report.

In the four-week period ending Dec. 31, 2023, the median mortgage payment in the U.S. was $2361. That is down $372, or 13.6%, from October. It also marked the lowest monthly payments recorded in nearly a year, according to a Thursday report from real estate group Redfin.

The decrease in mortgage payments came after the weekly average mortgage rate for the 30-year fixed term fell to 6.61% at the end of December after it peaked at 7.79% in October, which marked a 23-year high. The mortgage rate for the 15-year term also fell to 5.93% in the same week.

"There have been more tours and more offers on my listings since mortgage rates started declining," Las Vegas Redfin Premier agent Shay Stein said in the report. "It's all about perspective: Two years ago, buyers would have cried about a 6% mortgage rate. Now, they're happy they've dropped down to the mid-6's."

That being said, the median sale price of homes in the U.S. jumped by 4.4% in December to $363,371. It was the biggest increase recorded since October 2022. However, the shares of homes sold above their asking price were 24.2% in December, up from 23% recorded in the same month in 2022.

Home Affordability Remained Low

Despite falling monthly mortgage payments, home affordability remained low in 2023. According to a separate Redfin report, only 15.5% of homes put up for sale across the U.S. were affordable for the typical household. In comparison, at least 20.7% of homes for sale in 2022 were affordable for the typical household. The share was also over 40% before the homebuying boom during the COVID-19 pandemic.

The report also noted that the number of affordable homes for sale dropped to the lowest level on record, with only 352,500 affordable listings in 2023. The share was down 40.9% from 596,135 in 2022. While elevated mortgage rates and high home prices played a role in falling housing affordability, there was also a 21.2% drop in listings, which meant less inventory.