Rising Mortgage Rates Haven’t Yet Slowed Pending Sales
The real estate market is currently experiencing a notable shift, with pending home sales in the United States showing a significant increase. For the four weeks ending October 13, 2024, pending home sales rose by 3.2% year over year, marking the largest increase since 2021. This surge is particularly evident in 34 of the 50 most populous U.S. metropolitan areas, with California and Portland, Oregon, leading the way. This uptick in sales is attributed to a recent drop in mortgage rates to a two-year low at the end of September, following the Federal Reserve's interest-rate cut. However, it's important to note that this comparison is against a period in 2023 when sales were notably low due to high mortgage rates.
Despite the recent boost in sales, mortgage rates have begun to rise again, influenced by a stronger-than-expected jobs report on October 4. The average 30-year mortgage rate has increased to 6.32%, up from 6.08% at the end of September. Concurrently, home prices have also risen, with the median sale price increasing by 4.7% year over year, the largest rise since March. This has resulted in a typical homebuyer's monthly payment increasing by nearly $100 compared to the previous month.
The rise in mortgage rates has had a dampening effect on some early stages of the homebuying process. Home tours and mortgage-purchase applications have plateaued, with some potential buyers opting to wait for rates to decrease. Redfin's Homebuyer Demand Index, which measures tours and other buying services, has seen a slight decline from its six-month high but remains 7% higher than the previous year. Mortgage-purchase applications have decreased by 7% week over week, although they are still trending upwards from a year ago.
Sellers are also showing caution as rates rise, with new listings increasing by only 3.6% nationwide, the smallest year-over-year increase in a month. In Minneapolis, for example, buyers are negotiating more aggressively to reduce home prices due to the high mortgage rates. Sellers are generally receptive to these negotiations, preferring to sell their homes before the holiday season rather than letting them linger on the market.
Leading indicators of homebuying demand and activity reveal a complex picture. The daily average 30-year fixed mortgage rate is currently at 6.63%, near its highest level in three months, but down from 7.69% earlier. The weekly average rate is 6.32%, up from a two-year low of 6.08% two weeks prior, yet down from 7.57% a year ago. Mortgage-purchase applications have decreased by 7% from the previous week but are up 7% year over year. The Redfin Homebuyer Demand Index has increased by 6% from a month earlier and 7% year over year, marking the largest increase in over a year. Touring activity has decreased by 2% since the start of the year, compared to a 12% decrease at the same time last year. Google searches for "home for sale" have risen by 4% from a month earlier but are down 4% year over year.
Key housing-market data for the four weeks ending October 13, 2024, shows a mixed landscape. The median sale price is $384,412, a 4.7% increase, the largest since March. The median asking price is $399,675, a 6% increase, the largest in two years. The median monthly mortgage payment is $2,566 at a 6.32% mortgage rate, up from $2,489 a month earlier. Pending sales have reached 76,447, a 3.2% increase, the largest in nearly three years. New listings total 85,943, a 3.6% increase. Active listings stand at 1,024,565, a 16% increase, the smallest since March. The months of supply is at 4, up by 0.6 points, indicating balanced market conditions. The share of homes off the market in two weeks is 33.8%, down from 39%. The median days on market is 39, an increase of 6 days. The share of homes sold above list price is 26%, down from 30%. The average sale-to-list price ratio is 98.8%, a decrease of 0.3 points.
At the metro level, the data reveals significant variations. Fort Lauderdale, Florida, Milwaukee, Providence, Rhode Island, Chicago, and Nassau County, New York, have seen the largest year-over-year increases in median sale prices, with Fort Lauderdale leading at 11.2%. Conversely, Austin, Texas, San Antonio, Nashville, Tennessee, Tampa, Florida, and Fort Worth, Texas, have experienced declines, with Austin seeing the largest decrease at 4.6%. Pending sales have increased in Portland, Oregon, Los Angeles, Anaheim, California, San Jose, California, and Seattle, with Portland experiencing the largest increase at 17.8%. However, Tampa, Florida, West Palm Beach, Florida, Fort Lauderdale, Miami, and Orlando, Florida, have seen declines, with Tampa experiencing the largest decrease at 27.5%. New listings have increased in San Jose, California, Phoenix, Sacramento, California, Seattle, and Baltimore, Maryland, with San Jose seeing the largest increase at 22.2%. In contrast, Tampa, Atlanta, West Palm Beach, Orlando, and Fort Lauderdale have seen declines, with Tampa experiencing the largest decrease at 36.1%.
