The 4.7 percent annual drop in monthly payments has yet to bring buyers or sellers back to the market in a significant way, but this may largely be due to seasonality, economists say.
The new year started off with housing payments hitting a new low not seen since the beginning of 2024.
The median U.S. monthly housing payment dropped to $2,365 during the four weeks ending Jan. 4, which was down 4.7 percent year over year, Redfin reported on Thursday.
Monthly payments dropped largely in response to the weekly average mortgage rate hitting its lowest level in a year at 6.15 percent last week, down from about 7 percent in early 2025.
Rates have been coming down in response to a weak labor market and economy. However, home prices have continued to rise modestly, and are now up 1.1 percent year over year. Last year at this time, home prices were up about 5 percent from the previous year.
The drop in monthly payments has yet to bring buyers or sellers back to the market in a significant way, but this may largely be due to seasonality, economists say. Pending home sales are down 6.7 percent year over year, and new listings are down 8.3 percent year over year.
Chen Zhao | Credit: Redfin
“The housing market is in its holiday hangover season,” Chen Zhao, head of economic research at Redfin, said in the company’s report. “Prospective homebuyers are focused on getting back into work and school mode rather than hunting for houses — and in some parts of the country, snowy or wet weather is an obstacle. With mortgage rates and housing payments meaningfully lower than they were a year ago, we may see some buyers emerge in the coming weeks — and if buyers come, sellers are likely to follow.”
The Redfin Homebuyer Demand Index, which measures tours and other homebuying services by Redfin agents, was down 3 percent from the previous month and down 17 percent year over year. Meanwhile, active listings were up 2.3 percent year over year, their smallest annual increase in over two years.
Economists and other industry analysts are awaiting this Friday’s jobs report from the Bureau of Labor Statistics, which may help provide additional insights on the market’s outlook for 2026.
