New listings climbed 1.4 percent month-over-month in September, the largest increase since February 2022 on a seasonally adjusted basis, according to a new report from Redfin.
That’s a glimmer of relief for homebuyers, who for months have been waiting for more homes to hit the market.
“A lot of Americans are sitting on piles of money in their homes, and some are opting to cash out even if it means giving up their low mortgage rate; they’re worried there’s a possibility home prices will fall if rates remain elevated,” Redfin Chief Economist Daryl Fairweather said in a release. “We expect rates to remain high for the foreseeable future. But we also expect prices to stay high into next year. Housing supply is so strained that even a small uptick in listings lures buyers off the sidelines, bolstering sales.”
New listings dropped 8.9 percent on a year-over-year basis in September and remained far below pre-pandemic levels. That’s because mortgage rates hit the highest level in more than two decades, with the average weekly 30-year-fixed rate clocking in at 7.2 percent. It has since moved even higher, last week hitting a weekly average of 7.63 percent, and 8 percent on a daily basis, Redfin added.
The overall supply of homes for sale (active listings) rose 1.9 percent month-over-month in September on a seasonally adjusted basis, the largest gain since last summer. But active listings fell 16.9 percent from a year earlier and remained near the lowest level on record as homeowners continued to feel locked into their low mortgage rates.
Pending home sales rose 1.3 percent month-over-month to the highest level in nearly a year on a seasonally adjusted basis as more listings hit the market. They were down 12.1 percent from a year earlier, according to Redfin.
But while pending sales—the number of homes going under contract—improved in September, closed sales fell to the lowest level since the onset of the pandemic. They dropped 1.5 percent from a month earlier and 12.8 percent from a year earlier on a seasonally adjusted basis.
Pending sales ticking up and closed sales ticking down can be explained partly by a high portion of buyers backing out of contracts due to rising mortgage rates. Roughly 53,000 U.S. home-purchase agreements were canceled in September, equal to 16.3 percent of homes that went under contract that month—the highest percentage since October 2022, when mortgage rates surpassed 7 percent for the first time in two decades. That compares with 15.2 percent a month earlier and 15.8 percent a year earlier.
“Buyers are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out,” said Heather Kruayai, a Redfin Premier Agent in Jacksonville, Fla., which saw the second-highest rate of deal cancellations among the major metros Redfin analyzed. “Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs. Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close the deal.”