Pending Home Sales Jumped 2.5% in September, the Biggest Monthly Increase in Over a Year and a Half

Rhea-AI Summary

Redfin reports a 2.5% month-over-month increase in pending home sales for September 2024, the largest since January 2023. This jump is attributed to lower mortgage rates, which fell to a two-year low of 6.08% in late September, enhancing buyers' purchasing power. However, existing home sales dropped to a record low of 4,023,067 (seasonally adjusted annual rate), excluding the pandemic's start.

The median home sale price rose 3.9% year-over-year to $428,212, driven by a persistent housing shortage. New listings increased slightly but remained 17.7% below pre-pandemic levels. The average 30-year fixed mortgage rate was 6.18%, down 1.02 percentage points from the previous year.

Florida's housing market showed significant cooling, with West Palm Beach experiencing a 23% year-over-year decline in closed home sales, the largest among major U.S. metros. Recent hurricanes may further impact October sales in the region.

Positive

• Pending home sales increased 2.5% month-over-month, the largest rise since January 2023
• Median home sale price increased 3.9% year-over-year to $428,212
• Average 30-year fixed mortgage rate decreased by 1.02 percentage points year-over-year to 6.18%
• Active listings rose 14.9% year-over-year

Negative

• Existing home sales fell to a record low of 4,023,067 (seasonally adjusted annual rate)
• New listings were down 0.7% year-over-year and 17.7% below pre-pandemic levels
• Homes are taking longer to sell, with median days on market increasing from 33 to 39 year-over-year
• Percentage of homes sold above list price decreased from 33.2% to 28.4% year-over-year
• Significant declines in closed home sales across Florida markets, with West Palm Beach down 23% year-over-year

Insights

Real Estate Market Analyst

The 2.5% month-over-month increase in pending home sales is a significant shift, marking the largest rise since January 2023. This uptick, coupled with a 3.1% year-over-year increase, signals a potential thaw in the housing market freeze. The primary catalysts were lower mortgage rates, which hit a two-year low of 6.08% in late September and the Federal Reserve's interest rate cut.

However, it's important to note that closed sales of existing homes dropped to their lowest level since the pandemic's start, with a 0.5% monthly decline and 3% yearly decrease. This discrepancy between pending and closed sales highlights the lag effect in the market and suggests caution in interpreting the data too optimistically.

The median home sale price of $428,212, up 3.9% year-over-year, reflects ongoing inventory constraints. Despite a slight increase in new listings, they remain 17.7% below pre-pandemic levels, maintaining upward pressure on prices. This persistent shortage could continue to challenge affordability for many buyers, even as mortgage rates ease.

Economic Analyst

The housing market's response to the Federal Reserve's rate cut demonstrates the complex interplay between monetary policy and real estate dynamics. While the rate cut initially spurred activity, the subsequent uptick in mortgage rates underscores the market's sensitivity to broader economic indicators, such as employment data.

The regional disparities in the housing market are stark, with Florida metros experiencing significant declines in closed home sales. West Palm Beach saw a 23% year-over-year drop, followed by Tampa at 21.9%. These declines, exacerbated by recent hurricanes, highlight the vulnerability of certain markets to climate events and insurance challenges.

Looking ahead, several factors could influence market trajectory:

• The upcoming jobs report on November 1
• The Federal Reserve's potential 25 basis point rate cut on November 7
• The looming presidential election

These elements introduce uncertainty and could lead to unexpected market shifts. The divergence between pending and closed sales also suggests a potential disconnect between buyer enthusiasm and actual transaction completion, warranting close observation in the coming months.

Redfin reports that existing home sales, which are a lagging indicator, fell to a seasonally adjusted annual rate of 4,023,067. That’s the lowest level on record aside from the start of the pandemic.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Pending home sales jumped 2.5% month over month in September on a seasonally adjusted basis, the largest increase since January 2023, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. They rose 3.1% year over year, the biggest annual increase since May 2021.

Pending sales climbed last month for two reasons:

• Mortgage rates fell to the lowest level in two years, giving buyers more purchasing power.
• The Federal Reserve cut interest rates and outlined a plan for future rate cuts. Redfin agents say some house hunters jumped into the market because they assumed the Fed’s September 18 decision would cause mortgage rates to plunge. But by that point, much of the decline had already happened. Mortgage rates actually ticked up after the Fed’s decision. That’s because markets had already priced in aggressive expectations for rate cuts, and employment data came in hotter than expected.

Still, buyers are getting better rates than they were a year ago, when mortgage rates were above 7%. The weekly average interest rate on a 30-year mortgage now sits at 6.44% after hitting a two-year low of 6.08% in late September. The Fed is expected to cut interest rates by another 25 basis points at their November 7 meeting, which shouldn’t have a big impact on mortgage rates. But that could change if the November 1 jobs report has any surprises.

“September showed that there are buyers and sellers who are ready to jump into the market—when the conditions are right,” said Redfin Senior Economist Elijah de la Campa. “Most buyers who went under contract last month did so when mortgage rates were falling and before two major hurricanes devastated much of the South. We’re closely watching October data to see whether the recent increase in rates and widespread devastation from the storms causes the market to slow back down.”

De la Campa continued: “My advice for buyers is don’t try to time the market. There are a lot of swing factors, like the upcoming jobs report and the presidential election, that could cause the housing market to take unexpected twists and turns. If you find a house you love and can afford to buy it, now’s not a bad time. Mortgage rates are still down from their peak, and buyers in some areas are able to negotiate because homes have been sitting on the market.”

Closed sales of existing homes, many of which were negotiated before the latest drop in mortgage rates, dropped to the lowest level on record aside from the start of the pandemic. They fell 0.5% month over month and 3% year over year in September—to a seasonally adjusted annual rate of 4,023,067.

Overall closed home sales (including existing and new homes) fell 0.2% month over month on a seasonally adjusted basis and declined 1.6% year over year—to the lowest level since December.

September 2024 Housing Market Highlights: United States

	September 2024	Month-over-month change	Year-over-year change
Median sale price	$428,212	-1.1%	3.9%
Existing home sales, seasonally adjusted annual rate	4,023,067	-0.5%	-3%
Pending home sales, seasonally adjusted	478,074	2.5%	3.1%
Homes sold, seasonally adjusted	412,635	-0.2%	-1.6%
New listings, seasonally adjusted	513,345	0.8%	-0.7%
Total homes for sale, seasonally adjusted (active listings)	1,651,244	0.2%	14.9%
Months of supply	3.1	0.4	0.5
Median days on market	39	2	6
Share of homes sold above final list price	28.4%	-1.8 ppts	-4.8 ppts
Average sale-to-final-list-price ratio	99.1%	-0.2 ppts	-0.5 ppts
Pending sales that fell out of contract, as % of overall pending sales	14.8%	-0.3 ppts	-0.6 ppts
Monthly average 30-year fixed mortgage rate	6.18%	-0.32 ppts	-1.02 ppts
Note: Data is subject to revision

Home Sales Plummet Across Florida

In West Palm Beach, FL, closed home sales dropped 23% year over year in September—the biggest decline among the 50 most populous U.S. metropolitan areas. Next came three other Florida metros: Tampa (-21.9%), Miami (-19.8%) and Fort Lauderdale (-18.7%). Please note that metro-level data is not seasonally adjusted.

Hurricane Helene made landfall in the Big Bend area of the Florida Gulf Coast on September 26, and went on to devastate Appalachia, becoming the deadliest storm to hit mainland America since Hurricane Katrina. Then, less than two weeks later, Hurricane Milton made landfall in Florida. That may have an impact on October home sales.

“We have listings that were flooded and taken off the market, and sellers who were getting ready to list but can’t because they need to repair damage,” said MaryDell Penney, Redfin’s market manager in Orlando, FL. “Closings are being delayed because most lenders require post-storm reinspections, and insurers stop writing new policies when there’s a named storm in the region.”

Penney continued: “Contracts all have a force majeure section outlining what happens if services are shut down because of a natural disaster, etc. They also specify the risk of loss and seller's obligation to repair damage if the cost of restoration doesn’t exceed 1.5% of the purchase price. If damage exceeds that, then the buyer can either take the property as-is along with 1.5% from the seller, or the buyer can walk away.”

A recent Redfin survey found that two in five Florida residents have set aside money for home repairs related to unpredictable events caused by climate change.

Florida’s housing market had already been cooling prior to hurricane season amid rising inventory, surging HOA fees and a housing insurance crisis. In the metro-level highlights section below, you’ll notice that Florida is home to many of the metros that are showing signs of slowing, from sales to prices.

Home Prices Continue to Climb Amid Shortage of Homes for Sale

The median home sale price in September was $428,212, up 3.9% from a year earlier. Prices are rising because even though listings have inched up in recent months, there’s still a shortage of homes for sale.

New listings rose 0.8% month over month on a seasonally adjusted basis in September but were down 0.7% from a year earlier, and were 17.7% below pre-pandemic (September 2019) levels. Active listings rose 0.2% month over month and climbed 14.9% year over year, but were 23.1% below pre-pandemic levels.

Homes Are Taking Longer to Sell Than a Year Ago, And Fewer Are Going for Above the Asking Price

One reason active listings have been piling up is that many homes have been sitting on the market. That’s bad news for sellers, but it’s good news for buyers because it means they may have room to negotiate. Redfin agents recommend that sellers price their homes fairly from the get-go so they can sell quickly and don’t have to drop their price later on.

The typical home that sold in September was on the market for 39 days, up from 33 a year earlier. A little over one-third (36.5%) of homes that sold went under contract within two weeks, down from 42.3% in September 2023. And less than one-third (28.4%) of homes that sold last month went for more than their asking price, compared with roughly one-third (33.2%) a year earlier.

Metro-Level Highlights: September 2024

The bullets below are based on a list of the 50 most populous U.S. metropolitan areas. Some metros may be removed from time to time to ensure data accuracy.

• Prices: Median sale prices rose most from a year earlier in Newark, NJ (12.4%), Providence, RI (11.1%) and Nassau County, NY (10.8%). They fell in seven metros, with the biggest declines in Austin, TX (-6.5%), Tampa, FL (-3.4%) and Fort Worth, TX (-2.1%).
• Pending sales: Pending sales rose most in Phoenix (15%), Portland, OR (11.9%) and Seattle (10.7%). They fell most in West Palm Beach, FL (-14.9%), Miami (-14.4%) and Fort Lauderdale, FL (-13%).
• Closed home sales: Home sales rose most in San Jose, CA (8.1%), San Diego (5.9%) and San Francisco (5.6%). They fell most in West Palm Beach (-23%), Tampa (-21.9%) and Miami (-19.8%).
• New listings: New listings rose most in Boston (15.9%), Providence (14%) and Anaheim, CA (13.9%). They fell most in Atlanta (-20.2%), San Antonio (-20.1%) and Tampa (-17.8%).
• Active listings: Active listings rose most in Fort Lauderdale (43.1%), San Diego (41.3%) and Cincinnati (40.2%). They fell in three metros: New York (-5.8%), Atlanta (-2.3%) and Chicago (-0.9%).
• Sold above list price: In Newark, 65.6% of homes sold above their final list price, the highest share among the metros Redfin analyzed. Next came San Jose (61.5%) and San Francisco (56.2%). The shares were lowest in West Palm Beach (7%), Miami (9.6%) and Fort Lauderdale (10%).

To view the full report, including a chart, please visit: https://www.redfin.com/news/pending-home-sales-rise-most-since-2023/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241018616412/en/

Contact Redfin

Redfin Journalist Services:

Isabelle Novak, 414-861-5861

press@redfin.com

Source: Redfin

FAQ

What was the percentage increase in pending home sales for Redfin (RDFN) in September 2024?

Pending home sales for Redfin (RDFN) increased by 2.5% month-over-month in September 2024, which was the largest increase since January 2023.

How did existing home sales perform for Redfin (RDFN) in September 2024?

Existing home sales for Redfin (RDFN) fell to a seasonally adjusted annual rate of 4,023,067 in September 2024, which was the lowest level on record aside from the start of the pandemic.

What was the median home sale price reported by Redfin (RDFN) for September 2024?

The median home sale price reported by Redfin (RDFN) for September 2024 was $428,212, which represented a 3.9% increase from the previous year.

How did mortgage rates affect Redfin's (RDFN) housing market in September 2024?

Lower mortgage rates, which fell to a two-year low of 6.08% in late September 2024, gave buyers more purchasing power and contributed to the increase in pending home sales for Redfin (RDFN).