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Redfin: Pending home sales drop to lowest level since 2015

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Market Data
Tuesday, January 10, 2023

Pending U.S. home sales dropped 32 percent year-over-year to their lowest level since at least 2015 during the four weeks ending Jan. 1, according to a new report from Redfin.

The biggest declines were in pandemic homebuying hotspots Las Vegas, Phoenix and Austin, Texas, which each saw pending sales plummet more than 50 percent. The housing market fizzled out at the end of 2022 due to 6-percent-plus mortgage rates, a looming recession, record-low new listings, extreme winter weather and typical holiday slowdown.

Signals of early-stage demand are mixed. Redfin’s seasonally adjusted Homebuyer Demand Index was up 8 percent from two weeks earlier. Mortgage-purchase applications fell about 12 percent, though the double-digit drop was partly due to severe late-December storms hitting nearly every part of the U.S.

“Two categories of buyers are starting their search right now: First-timers hoping prices and competition are more manageable than they have been over the last few years, and returning buyers who took a break after losing out on multiple homes during the pandemic bidding-war frenzy,” said Seattle Redfin agent Shoshana Godwin in a release. “They should be able to take their time and find a home for a slightly lower price than last year, but the market will likely become more competitive over the next few months. I expect new listings to remain scarce as homeowners hold onto low interest rates while the pool of determined buyers circle the few homes that are available.”

Home prices fell from a year earlier in 19 of 50 most populous U.S. metros

The typical U.S. home sold for $350,000 during the four weeks ending Jan. 1. That’s up just 0.5 percent from a year earlier, slightly slower than the 0.7 percent growth seen at the beginning of the pandemic, when the market nearly ground to a halt, according to Redfin. 

Prices were down 10 percent from the June peak. On a metro level, home-sale prices fell year-over-year in 19 of the 50 most populous = metros during the four weeks ending Jan. 1. By comparison, just 10 metros saw price declines a month earlier.

Prices fell 10.4 percent year-over-year in San Francisco, 6 percent in Sacramento, 5.6 percent in San Jose, Calif., 5.4 percent in Los Angeles, 4.6 percent in Detroit, 4.4 percent in Oakland, Calif., 4.2 percent in Seattle, 3.9 percent in Pittsburgh, 2.9 percent in Austin, Texas, 2.8 percent in New York, 2.4 percent in Phoenix and 2.2 percent in Boston. They fell 2 percent or less in Anaheim, Calif., Chicago, Riverside, Calif., Washington, D.C., San Diego, Portland, Ore. and Newark, N.J.

This marks the biggest year-over-year drop for San Francisco prices since at least 2015.

Leading indicators of homebuying activity:

•             For the week ending Jan. 5, 30-year mortgage rates ticked up to 6.48 percent. The daily average was 6.41 percent on Jan. 5.

•             Mortgage purchase applications during the week ending Dec. 30 were down roughly 12 percent from two weeks earlier, seasonally adjusted. Purchase applications were down 42 percent from a year earlier.

•             The seasonally adjusted Redfin Homebuyer Demand Index was up 6 percent from a week earlier and up 10 percent from a month earlier during the four weeks ending Jan. 1. It was down 20 percent from a year earlier.

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, this data covers the four-week period ending Jan. 1.

•             The median home sale price was $350,000, up just 0.5 percent year-over-year, the slowest price growth on record and the third consecutive four-week period of price growth under 1 percent.

•             The median asking price of newly listed homes was $346,535, up 3.1 percent year-over-year.

•             The monthly mortgage payment on the median-asking-price home was $2,254 at the current 6.48 percent mortgage rate. That’s down slightly from a week earlier and down $253 from the October peak. Monthly mortgage payments are up 36.2 percent from a year ago.

•             Pending home sales were down 31.7 percent year-over-year, the 11th straight four-week period of pending sales declining more than 30 percent.

•             Among the 50 most populous U.S. metros, pending sales fell the most from a year earlier in Las Vegas (-61.9 percent), Phoenix (-56.7 percent), Austin (-54 percent), Jacksonville, Fla. (-53.8 percent) and Nashville (-51.5 percent).

•             New listings of homes for sale were down 22.4 percent from a year earlier, dropping to their lowest level on record.

•             Active listings were up 18.6 percent from a year earlier, the biggest annual increase since at least 2015.

•             Months of supply was 3.4 months, up slightly from a week earlier and up from 1.8 months a year earlier.

•             28 percent of homes that went under contract had an accepted offer within the first two weeks on the market, down from 35 percent a year earlier and the lowest share since January 2020.

•             Homes that sold were on the market for a median of 42 days, up nearly two weeks from 30 days a year earlier and up from the record low of 18 days set in May.

•             22 percent of homes sold above their final list price, down from 40 percent a year earlier and the lowest level since March 2020.

•             On average, 3.8 percent of homes for sale each week had a price drop, down sharply from 4.7 percent a week earlier and 5.7 percent a month earlier.

•             The average sale-to-list price ratiofell to 98 percent from 100.1 percent a year earlier. That’s the lowest level since March 2020.

 

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