30% drop in mortgage contract activity

With mortgage interest rates stable at around 7%, new report from redfin We found demand for housing eased in October, with one-third fewer homes contracted than reported in October 2021. The drop marks the largest decline in contracts since 2015.

Contracts may have fallen by 30% nationally, but pandemic hotspots such as Las Vegas, Miami and Phoenix have reported about 50% contract declines, with a record share of home sellers falling in the month of Saturday. has lowered the asking price of

But as mortgage rates dipped below 7% in the final week of October, several key indicators of homebuying demand stabilized after weeks of decline: A Google search for ‘homes for sale’. , Redfin’s Home Buyer Demand Index, Mortgage Purchase Applications, and Pending Sales.

“This week, the Fed has shed light on the end of the tunnel to slow the pace of rate hikes, but the exit of the tunnel may be more terrifying than expected,” he said. taylor ma, Deputy Chief Economist at Redfin. “Although there is some glimmer of hope in the data that mortgage rates have flattened out this week and buyers are stuck in the market, there is still a sliver of hope in the market coping with the pain of rising mortgage rates.”

“Mortgage rate declines may take longer than many expected. This suggests that housing trends may continue to deteriorate as the economy adapts to higher interest rates. “If the housing market was overheating last year, as Chairman Powell said Wednesday, then the record rise in interest rates will be a blow to the flames to bring the balance back.” It was like a bucket of water that had dried up, and it may take some time until the smoke clears to see what will happen next year.”

According to Redfin, whether this is a temporary pause in contracting activity or the beginning of a broader plateau in market activity as buyers readjust their budgets to cope with 7% mortgage rates. It’s too early to judge.

Prices for newly listed homes in October were $375,725, up 7% from a year ago, but down 7% from the market peak of $399.975 in May. The median home sale price was $360,861, up 4% from the previous year. This growth rate is down 13 percentage points from the peak annual growth rate in March.

Other key indicators of homebuying activity include:

  • Fewer people are searching ‘home for sale’ on Google than this time of year in 2021. Searches for the week ending October 29 were down 32% year-over-year, but were up 1 percentage point from the previous week.
  • The seasonally adjusted Redfin Homebuyer Demand Index, which measures requests for home tours and other homebuying services from Redfin agents, rose 0.5% over the past week and fell 33% year-over-year.
  • Tour activity fell 30% year-to-date as of October 30, compared to a 2% increase during the same period last year, according to home tour technology company ShowingTime. The gap between 2022 and his 2021 touring activity has narrowed by 3 percentage points over the past week.
  • Home sales prices declined year-over-year in four major US metropolitan areas. Prices were down 5% year over year in San Francisco, 2% in Oakland, CA, 2% in San Jose, CA and less than 1% in Lake County, IL. .
  • Among the metropolitan areas with more than 500 pending sales during the period, the biggest year-on-year declines in pending sales were in Las Vegas (-53%), Miami (-48%), and Seattle (-48%). %) and Phoenix (-47%). %), Portland, Oregon (-46%), and Riverside, CA (-45%).
  • Monthly mortgage payments for an average asking price home are $2,524 at the current 6.95% mortgage rate, up 48% from $1,703 a year ago when the mortgage rate was 3.09%, up 48% in the recent four weeks. It has moved up from its low of $2,203. Period until August 14th.
  • Pending home sales fell 33% year-on-year, the biggest drop since at least January 2015. First increase in 2 months.
  • New home listings for sale decreased 18% year over year. This wasn’t as extreme as his 20% drop in the four weeks to October 23rd.
  • Active listings (the number of homes offered for sale at any point during the period) were up 7.4% year-on-year. This was up from 7.0% in the previous quarter and the biggest increase in six weeks.
  • Months of supply (a measure of the balance of supply and demand calculated by dividing the number of active listings by closed sales) increased to 3.3 months, the highest level since June 2020.
  • 34% of contracted homes accepted the offer within the first two weeks on the market. This is little changed from the previous four weeks, but down from 40% the year before.
  • 23% of contracted homes received an accepted offer within a week of being on the market. This is little changed from his previous four-week period, but down from 28% the year before.
  • The median length of time homes were sold was 35 days, up one week from 27 days the previous year and up 18 days from the all-time low of 17 days set in May and early June.
  • 28% of homes sold above list price, down from 43% a year ago and the lowest level since July 2020.
  • On average, prices fell at a record 7.9% of homes sold each week, up from 3.7% a year earlier.
  • The average sales price ratio, which indicates how close homes are to final asking price, dropped to 98.7% from 100.5% a year earlier. This was the lowest level since July 2020.

click here View the entire report.

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