Redfin Reports More People Are Touring Homes, But That Hasn’t Yet Translated to More Sales

Rhea-AI Summary

Redfin's Homebuyer Demand Index rose 6% from a week earlier, signaling an increase in homebuyer activity. However, this has not yet translated into an improvement in pending sales. Mortgage rates are holding steady below 7%, leading to an increase in buyer demand. Sale prices rose 5.5% year over year, but pending sales posted their biggest year-over-year decline in four months. Redfin agents expect the increase in tours to convert into an improvement in pending sales over the next few months.

Positive

• None.

Negative

• Pending sales posted their biggest year-over-year decline in four months.

Insights

Market Research Analyst

The uptick in Redfin’s Homebuyer Demand Index suggests a potential revitalization of the housing market as the spring season approaches. The 6% increase in requests for tours and other buying services is indicative of a renewed interest from buyers, likely spurred by the stabilization of mortgage rates below 7%. This observation is critical as it signals a shift in consumer sentiment, which could lead to increased activity in the housing sector, affecting not only real estate companies like Redfin but also the broader economy through construction, lending and retail sectors.

However, it is important to note that this early-stage demand has not yet translated into a significant increase in pending sales. The discrepancy between the rising demand for home tours and the decline in mortgage-purchase applications reflects the complex dynamics of the current market. Factors such as the Federal Reserve's indication of maintaining interest rates may keep mortgage rates from falling significantly in the near term, potentially tempering buyer enthusiasm as the cost of borrowing remains relatively high.

From a market research perspective, the mixed signals—increased homebuyer interest yet decreased mortgage applications—suggest a cautious optimism. The data implies that while there is interest, the commitment to purchase is lagging, possibly due to buyers anticipating better rates or more inventory in the near future. This could result in a pent-up demand that may benefit the market if conditions improve, or it could lead to a stagnation if rates remain elevated and inventory tightens.

Financial Analyst

Redfin's report presents several important financial metrics that investors should consider. The year-over-year increase in median sale prices by 5.5% is the largest since October 2022, indicating a robust pricing environment despite the overall slowdown in sales. This could have implications for Redfin's revenue, as the company's earnings are tied to transaction volumes and home values.

Furthermore, the 8.5% year-over-year decline in pending sales is the largest in four months, suggesting that while buyers are showing interest, this has not yet translated into closed deals, which could impact short-term revenues for real estate firms. Active listings decreasing by 3.8% indicates a tighter supply, which may support prices but could also hinder sales volume if the trend continues.

For long-term stakeholders, the expectation of mortgage rates gradually declining by the end of the year could signal a more favorable buying environment ahead. However, the short-term outlook remains uncertain, with the Fed's interest rate policy likely keeping mortgage rates around their current levels. The financial implications for companies like Redfin include potential volatility in stock performance as the market digests these mixed signals.

Economist

The data presented in the report has broader economic implications. The housing market is a significant component of the economy, influencing consumer spending, investment and employment. The uptick in homebuyer demand, as evidenced by the increase in tours and service requests, is a positive sign for economic activity, as it suggests consumers are responding to the recent decrease in mortgage rates.

However, the decline in mortgage-purchase applications and the year-over-year drop in pending sales highlight a more complex economic landscape. These trends could be indicative of underlying consumer uncertainty, possibly due to broader economic factors such as inflation, job market concerns, or anticipation of future interest rate hikes. The Fed's stance on interest rates is particularly influential, as it affects borrowing costs and can sway consumer and investor confidence.

In the context of supply and demand, the report's indication of a slight increase in months of supply to 4.8 months aligns with a balanced market. However, the decline in active listings suggests that inventory constraints could continue to pose challenges. This balance between supply and demand is critical for sustainable economic growth, as it affects housing affordability and the overall health of the real estate market.

Redfin’s Homebuyer Demand Index is ticking up as the spring home-selling season draws nearer. That hasn’t yet converted to a meaningful improvement in pending sales–but Redfin agents expect it will in the next few months.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Redfin’s Homebuyer Demand Index—a measure of requests for tours and other buying services from Redfin agents—rose 6% from a week earlier during the week ending January 28, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. An additional measure of showings also signals tours have ticked up over the last week.

More buyers are touring homes because mortgage rates are holding steady below 7%, down from 8% this past October, and some buyers are worried prices will increase more if they wait longer. Sale prices rose 5.5% year over year during the four weeks ending January 28, the biggest increase in over a year.

But that earliest-stage demand hasn’t yet translated into home sales. Mortgage-purchase applications declined from a week earlier and pending sales posted their biggest year-over-year decline in four months, likely reflecting tepid early-stage demand during the middle of January. Home tours and other actions buyers typically take before applying for a mortgage was lower than expected in mid-January as daily average mortgage rates inched up from their December low point and severe weather kept many would-be buyers at home.

Redfin agents expect the increase in tours to convert into an improvement in pending sales over the next few months. That’s partly because of typical seasonality: Home listings and sales usually pick up as spring approaches.

“I thought declining mortgage rates and more inventory would cause the market to take off right at the start of the new year. But even though demand has picked up some, I’m not wowed,” said Hal Bennett, a Redfin Premier agent in the Seattle area. “Now I believe this year’s market will launch in the spring, once 6% rates are even more entrenched in buyers’ psyches and more homeowners list their houses.”

This week’s economic news suggests that mortgage rates are unlikely to meaningfully fall in the next few months. At its press conference on January 31, the Fed signaled they’re unlikely to cut interest rates in March, which will probably keep mortgage rates elevated near their current level into the spring, though Redfin economists still expect them to gradually decline by the end of the year.

Leading indicators

Indicators of homebuying demand and activity
	Value (if applicable)	Recent change	Year-over-year change	Source
Daily average 30-year fixed mortgage rate	6.75% (Jan. 31)	Down from 6.95% a week earlier	Up from 6.17%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.69% (week ending Jan. 25)	Up from 6.6% a week earlier, but near lowest level since May	Up from 6.13%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Down 11% from a week earlier; up 10% from a month earlier (as of week ending Jan. 26)	Down 20%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Down 3% from a month earlier (as of week ending Jan. 28)	Down 17%	Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents
Google searches for “home for sale”		Up 25% from a month earlier (as of Jan. 27)	Down 16%	Google Trends
Touring activity		Up 9% from the start of the year (as of Jan. 30)	At this time last year, it was up 5% from the start of 2023	ShowingTime, a home touring technology company

Key housing-market data

U.S. highlights: Four weeks ending January 28, 2024 Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.
	Four weeks ending January 28, 2024	Year-over-year change	Notes
Median sale price	$361,245	5.5%	Biggest increase since Oct. 2022
Median asking price	$392,349	7%	Biggest increase since Sept. 2022
Median monthly mortgage payment	$2,595 at a 6.69% mortgage rate	12.3%	Down roughly $120 from all-time high set in October 2023, but up roughly $250 from the four weeks ending Dec. 31
Pending sales	62,501	-8.5%	Biggest decline since October 2023
New listings	65,722	4.9%
Active listings	743,508	-3.8%
Months of supply	4.8 months	+0.2 pts.	4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions
Share of homes off market in two weeks	30%	Up from 29%
Median days on market	47	-2 days
Share of homes sold above list price	22.8%	Up from 21%
Share of homes with a price drop	5.2%	+0.3 pts.
Average sale-to-list price ratio	98.2%	+0.5 pts.

Metro-level highlights: Four weeks ending January 28, 2024 Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.
	Metros with biggest year-over-year increases	Metros with biggest year-over-year decreases	Notes
Median sale price	Anaheim, CA (15.6%) Miami (14.7%) New Brunswick, NJ (13.3%) West Palm Beach, FL (12.9%) Detroit (11.8%)	Austin, TX (-5.6%) San Antonio, TX (-2.1%)	Declined in 2 metros
Pending sales	San Francisco (11.5%) San Jose, CA (10.9%) Anaheim, CA (1.7%)	Portland, OR (-31.2%) San Antonio, TX (-31%) Denver (-30.6%) Nashville, TN (-18.7%) New Brunswick, NJ (-17.6%)	Increased in 3 metros
New listings	Fort Lauderdale, FL (26.5%) Phoenix (23.1%) San Diego, CA (22.6%) Miami (22.3%) Minneapolis, MN (19.9%)	Denver (-20.8%) Chicago (-18.7%) Atlanta (-15.9%) Portland, OR (-10.5%) Nashville, TN (-9.8%)	Declined in 16 metros

To view the full report, including charts, please visit:
https://www.redfin.com/news/housing-market-update-more-house-hunters-touring-homes

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 also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

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/20240201917545/en/

Redfin Journalist Services:

Kenneth Applewhaite, 206-414-8880

press@redfin.com

Source: Redfin

FAQ

What is Redfin's Homebuyer Demand Index?

Redfin's Homebuyer Demand Index is a measure of requests for tours and other buying services from Redfin agents.

What was the year-over-year change in sale prices?

Sale prices rose 5.5% year over year.

What are the key housing-market data highlights?

The median sale price was $361,245, showing a 5.5% increase year over year. Pending sales declined by 8.5%, the biggest decline in four months. New listings saw a 4.9% increase.

What are Redfin agents' expectations for the next few months?

Redfin agents expect the increase in tours to convert into an improvement in pending sales over the next few months.

What are the key indicators of homebuying demand and activity?

The daily average 30-year fixed mortgage rate was 6.75% as of Jan. 31, down from 6.95% a week earlier. Weekly average 30-year fixed mortgage rate was 6.69% as of the week ending Jan. 25.

What is the current mortgage rate?

The current daily average 30-year fixed mortgage rate is 6.75%.

Where can I find the full report?

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-more-house-hunters-touring-homes