Pending home sales dropped to the lowest level since at least 2015, according to a new Redfin report.
Redfin attributes the drop to the record high mortgage rates, recession concerns, record low inventory, extreme winter weather and the holiday slowdown.
Nationally, sales fell 32% from last year, during the four weeks ended Jan. 1, with the biggest declines in Las Vegas, Phoenix and Austin, where pending sales fell more than 50%.
The report found early-stage demand to be a mixed bag. Its Homebuyer Demand Index, which measures requests for tours and other services, was up 8% from two weeks prior, while mortgage applications dropped 12%, although Redfin attributed that to the late December storms that plagued the country.
Shoshana Godwin, a Redfin agent in Seattle, said right now there are two types of buyers in the market: first-time homebuyers hoping for more manageable prices and competition than we’ve seen over the past few years and returning buyers who took a break during the pandemic driven bidding wars.
“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,” Godwin said. “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.”
And it wasn’t just pending sales that fell, home prices also dropped.
During the four weeks ended Jan. 1, home prices fell from 2021 in 19 of the 50 most populous U.S. metros, the report found. There was a 10.4% year-over-year drop in prices in San Francisco, a 6% drop in Sacramento, 5.6% in San Jose, California, 5.4% in Los Angeles, 4.6% in Detroit, 4.4% in Oakland, California, 4.2% in Seattle, 3.9% in Pittsburgh, 2.9% in Austin, Texas, 2.8% in New York, 2.4% in Phoenix and 2.2% in Boston.
Home prices fell 2% or less in Anaheim, California, Chicago, Riverside, California, Washington, D.C., San Diego, Portland, Oregon and Newark, New Jersey.
Thirty-year mortgage rates rose to 6.48% for the week ending Jan. 5. The daily average, according to the report, was 6.41% on Jan. 5. Meanwhile, mortgage applications were down 12% from two weeks prior and purchase applications were down 42% from 2021.
The median asking price of a home rose 0.5% from 2021 to $350,000, the slowest growth rate on record. Meanwhile, the median sale price increased 3.1% year over year to $346,535.
With the higher rate, the average monthly mortgage payment on a median-priced home was $2,254, down slightly from the previous week and down $253 from its October peak. Year over year, mortgage payments are up 36.2%.
Pending home sales fell 31.7% from last year, the 11th straight four-week period of declines and again marking the largest decline since January 2015.
During the week ended Dec. 31, Redfin found Google searches for “homes for sale” rose from its November low but were down 33% from last year.
In the four weeks ended Jan. 1, active listings rose 18.6% from last year, marking the biggest annual increase since 2015. Meanwhile, new listings fell 22.4% from last year, the biggest drop on record.