Redfin’s Homebuyer Demand Index is up 10 percent and mortgage-purchase applications are up 14 percent from the end of October, when both hit their 2022 troughs, according to a new report.
The most recent average came in at 6.31 percent this week, down from a peak of 7.08 during the last week of October, saving the typical homebuyer more than $200 on their monthly payment.
However, Redfin data points to demand and purchase applications still being down sharply from a year ago. Additionally, pending home sales are down more than 30 percent year-over-year and homes are selling at their slowest pace in nearly two years. The nation’s median home-sale price rose just 1.4 percent year-over-year, the slowest growth rate since the start of the pandemic, reflecting still-cool homebuyer demand.
“Slowing inflation and the hope of the Fed easing rate hikes in the new year are likely to bring mortgage rates down further and thereby improve homebuying demand,” said Redfin Deputy Chief Economist Taylor Marr in a release. “But don’t call it a comeback or even a recovery yet; demand is still way down from its peak. We’re keeping a close eye on the labor market for confirmation that inflation will continue slowing. A strong job market like the one we have now contributes to inflation because it pushes up wages and leads to higher prices. Though it seems counterintuitive, a slight uptick in unemployment and/or slower economic growth would likely help bring mortgage rates down further. If that happens, the increase we’re seeing in early-stage demand could translate to an uptick in pending sales in early 2023.”
Home prices fell in 15 metros
The number of metros with declining sale prices is piling up. Home-sale prices fell year-over-year in 15 of the 50 most populous U.S. metros, many of them in California, compared with declines in 11 of the 50 a week earlier, according to Redfin.
Prices fell 7.3 percent year-over-year in San Francisco, 5.8 percent in San Jose, Calif., 3.3 percent in Los Angeles, 3 percent in Austin, Texas, 2.6 percent in Pittsburgh, 2 percent in Oakland, Calif., 1.9 percent in Detroit and 1.8 percent in Sacramento, Calif.. They declined 1 percent or less in Anaheim, Calif., Chicago, Philadelphia, Seattle, Riverside, Calif., Phoenix and Las Vegas.
The Los Angeles and Austin price declines are the biggest since at least 2015, as far back as Redfin’s data goes.
Although the declines were small, this marks the first time Las Vegas and Riverside home prices have fallen on a year-over-year basis since at least 2015.
Leading indicators of homebuying activity:
- The median home sale price was $353,750, up 1.4 percent year-over-year, the slowest growth rate since the start of the pandemic.
- The median asking price of newly listed homes was $354,779, up 3.9 percent year-over-year, the slowest growth rate since the start of the pandemic.
- The monthly mortgage payment on the median-asking-price home was $2,276 at the current 6.31 percent mortgage rate. That’s down slightly from a week earlier and down more than $200 from a month earlier, when mortgage rates were around 7 percent. Still, monthly mortgage payments are up 36.5 percent from a year ago.
- Pending home sales were down 33.3 percent year-over-year, one of the largest declines since at least January 2015, as far back as this data goes.
- Among the 50 most populous U.S. metros, pending sales fell the most from a year earlier in Las Vegas (-64 percent), Austin (-58.3 percent), Phoenix (-57.1 percent), Portland, Ore. (-53.6 percent) and Jacksonville, Fla. (-52 percent).
- New listings of homes for sale were down 21.5 percent from a year earlier, the largest decline since the start of the pandemic.
- Active listings (the number of homes listed for sale at any point during the period) were up 15.9 percent from a year earlier, the biggest annual increase since at least 2015.
- Months of supply—a measure of the balance between supply and demand, calculated by dividing the number of active listings by closed sales—was 3.7 months, down from a week earlier and up from two months a year earlier.
- Twenty-nine percent of homes that went under contract had an accepted offer within the first two weeks on the market, down from 37 percent a year earlier and the lowest share since January 2020.
- Homes that sold were on the market for a median of 38 days, up more than a week from 29 days a year earlier and up from the record low of 17 days set in May and early June.
- A quarter of homes sold above their final list price, down from 41 percent a year earlier and the lowest level since June 2020.
- On average, 5.6 percent of homes for sale each week had a price drop, down sharply from 7.2 percent a month earlier. It’s up from 2.6 percent a year earlier.
- The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, fell to 98.3 percent from 100.3 percent a year earlier. That’s the lowest level since March 2020.