Pending Home Sales Post Smallest Decline Since September
February 14, 2023
Homebuyer demand is continuing to rise from recent troughs despite weekly mortgage rates ticking up according to a new report from Redfin.
To start, pending home sales posted their smallest decline since September 2022 during the month preceding Feb. 5, falling 20% from a year earlier; mortgage-purchase applications also rose 3%.
Additionally, Redfin’s Homebuyer Demand Index rose to levels last seen in September 2022.
As more homes hit the market, demand is increasing even though new listings dropped 17% year-over-year, which is the smallest decline of this statistic in more than four months.
“By Super Bowl weekend, we usually have a good idea how a given year’s housing market will play out. But this year is anything but typical,” said Redfin Economics Research Lead Chen Zhao. “This year is more uncertain than most because the effects of last year’s rapid rate hikes are still flowing through the economy, and we’re not sure how much more the Fed will raise rates this year. So even after the Super Bowl comes and goes, we’ll be closely monitoring the Fed’s words and actions, along with inflation rates and indicators about the health of the labor market for signals that could affect homebuyer demand.”
Key data from the report, as highlighted by Redfin, includes:
For the week ending Feb. 9, the average 30-year fixed mortgage rate was 6.12%, up slightly from 6.09% the prior week, but down from the 2022 peak of 7.08% in November. The daily average was 6.32% on February 9, up from 5.99% a week earlier.
Mortgage-purchase applications during the week ending February 3 increased 3% from a week earlier, seasonally adjusted. Purchase applications were down 37% from a year earlier.
The seasonally adjusted Redfin Homebuyer Demand Index hit its highest level since September during the week ending February 5. It was up 21% from its October trough but down 25% from a year earlier.
Google searches for “homes for sale” were up about 38% from their November low during the week ending Feb. 4, but down about 23% from a year earlier.
The median home sale price was $346,769, up 0.9% year over year.
Median sale prices fell in 18 of the 50 most populous U.S. metros, with the biggest drops in Oakland, CA (-9.7% YoY), Austin (-6.5%), Sacramento (-5.8%), San Francisco (-4.9%), and Phoenix (-4.6%). Prices increased most in Milwaukee (12.8%), West Palm Beach, FL (12.3%), Indianapolis (10.1%), Fort Lauderdale, FL (9.8%) and Miami (8.4%).
The median asking price of newly listed homes was $376,160, up 1.7% year over year.
The monthly mortgage payment on the median-asking-price home was $2,376 at a 6.12% mortgage rate, the current weekly average. That’s down $131 (-5.2%) from the October peak. Monthly mortgage payments are up 25.1% ($477) from a year ago.
Pending home sales were down 19.5% year-over-year, the smallest decline since September.
Among the 50 most populous U.S. metros, pending sales fell most in Las Vegas (-58.7% YoY), Nashville (-50.6%), Phoenix (-50.1%), San Jose (-49.7%), and Austin (-48.9%). Pending sales rose in two metros: Cincinnati (31.5%) and Chicago (31.4%).
New listings of homes for sale fell 16.5% year over year. That’s the smallest decline since September.
New listings fell in all 50 of the most populous U.S. metros. They declined most in Oakland (-40.5%), Sacramento (-39%), San Jose (-38.1%), San Diego (-38%) and Las Vegas (-37.6%). They fell by less than 1% in Nashville, Dallas and Austin.
Active listings (the number of homes listed for sale at any point during the period) were up 22.6% from a year earlier.
Months of supply—a measure of the balance between supply and demand, calculated by the number of months it would take for the current inventory to sell at the current sales pace—was 4.1 months, up from 2.2 months a year earlier.
42% of homes that went under contract had an accepted offer within the first two weeks on the market, the highest level since July, but down from 50% a year earlier.
Homes that sold were on the market for a median of 50 days. That’s up from 34 days a year earlier and the record low of 18 days set in May.
20% of homes sold above their final list price, down from 39% a year earlier and the lowest level since March 2020.
On average, 5.4% of homes for sale each week had a price drop, up from 2.1% a year earlier.
The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, fell to 97.7% from 100% a year earlier. That’s the lowest level since March 2020.