Redfin Reports Pending Home Sales Decline Due to High Housing Costs, California Wildfires and Frigid Weather in Other Parts of U.S.

Rhea-AI Summary

Redfin (NASDAQ: RDFN) reports significant declines in home sales and listings due to multiple factors affecting the U.S. housing market. Pending home sales fell 8.4% year over year during the four weeks ending January 12, marking the largest decline since October 2023. The Redfin Homebuyer Demand Index dropped 11% month over month to its lowest level since August.

The decline is attributed to Southern California wildfires, extreme weather conditions in the Northeast, Midwest, and South, and rising housing costs. The median housing payment is at its highest level in over two months, with home sale prices up 5.8% year over year. However, there are positive indicators: mortgage rates are falling following a softer-than-expected core inflation report, and mortgage-purchase applications have reached their highest level in nearly a year.

In Los Angeles, wildfires are simultaneously decreasing homebuying demand and listings while increasing demand from displaced residents seeking temporary housing. The median sale price nationwide stands at $379,609, with active listings up 9.8%, representing the smallest increase in nearly a year.

Positive

• Mortgage-purchase applications jumped to highest level in nearly a year
• Home sale prices up 5.8% year over year to $379,609
• Active listings increased 9.8%
• Mortgage rates showing downward trend after latest CPI report

Negative

• Pending home sales declined 8.4% YoY, biggest drop since October 2023
• Homebuyer Demand Index down 11% month over month to lowest since August
• Median monthly mortgage payment at highest level in over two months
• New listings posted biggest annual decline since September 2023

Insights

Market Research Analyst

The housing market is showing concerning signals with the 8.4% year-over-year decline in pending sales - the largest drop since October 2023. This decline, coupled with the 11% monthly decrease in Redfin's Homebuyer Demand Index, suggests significant market headwinds. The combination of $379,609 median sale prices (5.8% YoY increase) and elevated mortgage rates has pushed monthly payments to a concerning $2,586.

The market is experiencing a complex dynamic where natural disasters and weather events are creating localized disruptions, particularly in Los Angeles where displaced residents are creating unexpected rental demand surges. The 9.8% increase in active listings represents the smallest yearly gain in nearly a year, indicating potential market tightening. The 4.6 months of supply suggests we're approaching but haven't quite reached a balanced market.

Regional disparities are stark - Milwaukee leads with a 20.4% price increase while Austin shows a 4.1% decline. These variations highlight the increasingly fragmented nature of the U.S. housing market, with local conditions driving divergent outcomes.

Financial Analyst

The latest housing data presents a challenging outlook for Redfin (RDFN). The company's revenue is directly tied to transaction volume and the significant decline in pending sales could impact near-term financial performance. The 27% weekly jump in mortgage purchase applications offers a potential silver lining, but this hasn't yet translated into actual sales.

For investors, it's important to understand that Redfin's business model is particularly sensitive to market slowdowns. With a 956.5M market cap, the company needs to navigate this period of reduced activity efficiently. The divergent regional performance adds complexity to revenue forecasting - while some markets like Milwaukee show strength, key markets like Austin and San Francisco are experiencing price declines.

The increase in active listings could potentially benefit Redfin's platform engagement, but the reduced conversion rate to sales (only 21.7% of homes selling above list price, down from 23%) suggests continued pressure on transaction revenues. The company's ability to monetize increased rental demand, particularly in disaster-affected areas like Los Angeles, could provide some offset to the slowdown in sales activity.

Pending sales posted their biggest decline in over a year this week, as did new listings. But mortgage-purchase applications are on the rise, and mortgage rates are coming down.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Home tours and pending sales are falling as devastating wildfires burn in Southern California, extreme cold and snow hit the Northeast, Midwest and South, and housing costs rise across the country. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Redfin’s Homebuyer Demand Index—a seasonally adjusted measure of tours and requests for other buying services from Redfin agents—is down 11% month over month to its lowest level since August. Pending home sales fell 8.4% year over year during the four weeks ending January 12, the biggest decline since October 2023. Prospective sellers are also sitting on the sidelines, with new listings posting their biggest annual decline since September 2023.

But there are some pieces of encouraging news for homebuyers and the housing market. Mortgage rates are falling after the latest CPI report showed softer-than-expected core inflation, perhaps bringing some relief to hopeful buyers. And mortgage-purchase applications jumped this week to their highest level in nearly a year, signaling that pending sales may improve in the weeks to come. It’s also worth noting that it’s too early in the new year to determine how 2025’s housing market will shape up.

For now, high housing costs are one reason pending sales are declining. Many would-be buyers are priced out, with the median housing payment nationwide sitting at its highest level in over two months. Home sale prices are up 5.8% year over year, and daily average mortgage rates hit their highest level since May this week after a surprisingly strong jobs report before the CPI report reversed the course of rates.

Los Angeles wildfires push down sales, listings, but agents report people displaced from homes are scrambling to find housing

The wildfires are simultaneously pushing down homebuying demand and listings in the Los Angeles metro, and driving up buying and rental demand from the pocket of people who have been displaced from their homes. During the four weeks ending January 12, Los Angeles pending sales fell 4% year over year and new listings fell 2.5%. Redfin Economic Research Lead Chen Zhao said sales and listings in Los Angeles would have posted smaller declines if not for the fires and that Redfin will likely see bigger declines in the coming weeks.

But local real estate agents are reporting a surge in demand—especially for rentals—from people who have been directly impacted by wildfire damage. Many of the thousands of Los Angeles residents who have lost their homes are competing for rentals and listings in the area.

“There’s a feeling of overwhelming sadness and stress about the destruction we’re seeing in so many neighborhoods,” said Susan Brown, a Redfin Premier agent in the Los Angeles area. “Part of that is because so many people now have to find new homes, and we’re seeing a chaotic ripple effect in the market. I’ve personally had three people who lost their homes reach out to me to start searching, and we all have an influx of clients looking for rental properties. Many Redfin agents are pivoting to helping people find rentals as soon as possible. Because rentals are going so fast, my advice for people searching for housing is to directly reach out to a real estate agent for help.”

Cold, snow slowing housing market in the Northeast, Midwest

In much of the rest of the country, frigid temperatures and snow are keeping house hunters at home, and delaying homeowners from listing.

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page.

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	7.13% (Jan. 15)	Rates hit 7.26% this week, the highest level since May, then declined slightly	Up from 6.88%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.93% (week ending Jan. 9)	Highest level since July	Up from 6.66%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Up 27% from 1 week earlier (as of week ending Jan. 10)	Down 2%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Down 11% from a month earlier to lowest level since August (as of week ending Jan. 12)	Up 6%	Redfin Homebuyer Demand Index, a measure of tours and other homebuying services from Redfin agents
Google searches for “home for sale”		Up 35% from a month earlier (as of Jan. 13)	Down 4%	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending Jan. 12, 2025 Redfin’s national metrics include data from 400+ U.S. metro areas, and are based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.
	Four weeks ending Jan. 12, 2025	Year-over-year change	Notes
Median sale price	$379,609	5.8%
Median asking price	$383,473	4.7%
Median monthly mortgage payment	$2,586 at a 6.93% mortgage rate	7.5%	Highest level since October
Pending sales	49,136	-8.4%	Biggest decline since October 2023
New listings	47,890	-3.6%	Biggest decline since September 2023
Active listings	873,497	9.8%	Smallest increase in nearly a year
Months of supply	4.6	+0.3 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	22%	Down from 25%
Median days on market	50	+6 days
Share of homes sold above list price	21.7%	Down from 23%
Average sale-to-list price ratio	98.2%	Essentially unchanged

Metro-level highlights: Four weeks ending Jan. 12, 2025 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	Milwaukee (20.4%) Cleveland (14.1%) Warren, MI (13.1%) Pittsburgh (12.9%) Newark, NJ (12.9%)	Austin, TX (-4.1%) San Francisco (-3.1%) Tampa, FL (-0.5%)	Declined in 3 metros
Pending sales	Anaheim, CA (1.8%) New Brunswick, NJ (0.6%)	Newark, NJ (-18.3%) New York (-17.8%) Detroit (-16.7%) Minneapolis (-16.5%) Nashville, TN (-16.2%)	Increased in 2 metros
New listings	San Jose, CA (13.1%) Phoenix (12%) Seattle (9.5%) Jacksonville, FL (8.4%) Anaheim, CA (6.5%)	Newark, NJ (-27%) Detroit (-22.8%) Austin, TX (-20.8%) Warren, MI (-20.1%) San Antonio (-18.7%)	Increased in 17 metros

To view the full report, including charts, please visit:
https://www.redfin.com/news/housing-market-update-pending-home-sales-decline

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, and title insurance 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. 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 approximately 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/20250116834213/en/

Contact Redfin

Redfin Journalist Services:

Tana Kelley

press@redfin.com

Source: Redfin

FAQ

What caused the decline in RDFN's pending home sales in January 2025?

The decline was caused by Southern California wildfires, extreme cold weather in Northeast, Midwest, and South, and rising housing costs across the country.

How much did Redfin's pending home sales drop in the four weeks ending January 12, 2025?

Pending home sales fell 8.4% year over year, marking the biggest decline since October 2023.

What is the current median home sale price according to Redfin's latest report?

The median home sale price is $379,609, representing a 5.8% increase year over year.

How are the Los Angeles wildfires affecting RDFN's housing market metrics?

In Los Angeles, pending sales fell 4% year over year and new listings fell 2.5%, while simultaneously driving up buying and rental demand from displaced residents.

What is the current mortgage rate trend according to Redfin's report?

Mortgage rates hit 7.26% before declining to 7.13%, showing a downward trend following the latest CPI report showing softer-than-expected core inflation.