Pending U.S. home sales rose 3.2 percent year-over-year during the four weeks ending Oct. 13, the biggest increase in three years, according to a new report from Redfin.
On a local level, pending sales are up in 34 of the 50 most populous U.S. metros, with the biggest increases in California and in Portland, Ore.
Sales have improved over the last month because mortgage rates fell to a two-year low at the end of September amid the Fed’s highly anticipated interest rate cut. That’s compared to a period in 2023 when sales slumped as mortgage rates approached a two-decade high.
Mortgage rates have ticked up over the last few weeks, largely due to a stronger-than-expected jobs report on Oct. 4. The weekly average 30-year rate is 6.32 percent, compared with 6.08 percent during the last week of September.
Home prices are also rising, with the median sale price posting a 4.7 percent year-over-year increase, the biggest uptick since March. That has pushed the typical homebuyer’s monthly payment up nearly $100 from a month ago, according to Redfin.
Rising rates have slowed demand somewhat at earlier stages of the homebuying process. Some would-be buyers seem to be waiting for rates to come back down: Redfin’s Homebuyer Demand Index has fallen marginally from the six-month high it hit two weeks ago, though it is up 7 percent year-over-year. And mortgage-purchase applications are down 7 percent week-over-week, but they are still trending up from a year ago.
Redfin added that sellers are taking a small step back as rates rise. New listings are up 3.6 percent nationwide, the smallest year-over-year increase in a month.
“So far, higher rates haven’t slowed buyers down in the Minneapolis area. But buyers are negotiating more heavily than they have in years, trying to shave money off the home price because they’re taking on a pretty high rate,” said Emily Olson, a Redfin Premier agent in Minneapolis. “It’s a good strategy, because sellers are receptive to it. Sellers know every buyer taking on a mortgage is contending with high rates, and they would rather get their house sold now than let it linger on the market going into the holiday season.”