Redfin Reports Pending Home Sales Post Biggest Increase Since 2021

Rhea-AI Summary

Redfin reports a significant uptick in U.S. pending home sales, rising 2% year-over-year in the four weeks ending October 6, marking the largest increase in three years. This surge in demand is attributed to falling mortgage rates, which have reduced the typical homebuyer's monthly payment to $2,526, down 5.8% from last year. However, recent mortgage rate increases following a strong jobs report may impact future demand.

The report highlights regional variations, with coastal Florida experiencing declining sales, partly due to Hurricane Helene and rising insurance costs. New listings have increased by 5.7% year-over-year, continuing a year-long trend. The Redfin Homebuyer Demand Index is near its highest level since May, indicating strong buyer interest despite potential challenges ahead.

Positive

• Pending home sales increased 2% year-over-year, the biggest rise in three years
• Typical homebuyer's monthly payment decreased to $2,526, down 5.8% year-over-year
• New listings rose 5.7% year-over-year
• Redfin Homebuyer Demand Index near highest level since May
• Mortgage-purchase applications up 8% month-over-month

Negative

• Mortgage rates jumped to 6.62% on Monday from 6.26% last Thursday
• Pending sales falling in coastal Florida (West Palm Beach -17.6%, Tampa -15.5%, Miami -14.8%)
• Increasing insurance and HOA costs in Florida due to climate disasters

Insights

Real Estate Market Analyst

The recent uptick in pending home sales marks a significant shift in the U.S. housing market. The 2% year-over-year increase is the largest in three years, signaling renewed buyer interest. This surge is primarily driven by the recent decline in mortgage rates, which has brought the typical homebuyer's monthly payment down to $2,526, a 5.8% year-over-year decrease.

However, it's important to note that this comparison is against a period of sluggish sales last year when rates hit 7.5%. The recent jump in rates to 6.62% could dampen this momentum in the coming weeks. The 5.7% increase in new listings is also noteworthy, as it continues a year-long trend of improving inventory.

Regional disparities are evident, with coastal Florida experiencing declines due to hurricane impacts and rising insurance costs. This could reshape buyer preferences in climate-vulnerable areas. Overall, while the market shows signs of life, it remains sensitive to rate fluctuations and regional factors.

Economic Analyst

The housing market's response to recent economic shifts is telling. The Federal Reserve's interest rate cut has had a tangible impact on buyer behavior, even though mortgage rates had been declining in anticipation. This demonstrates the psychological effect of Fed policy on consumer confidence in the housing sector.

The 8% month-over-month increase in mortgage purchase applications further underscores this renewed interest. However, the market remains in a delicate balance. The recent strong jobs report, which pushed rates up, illustrates how quickly economic data can influence mortgage rates and, consequently, buyer behavior.

The regional variations, particularly the slowdown in Florida, highlight the growing importance of climate risk in real estate markets. This trend could lead to long-term shifts in property values and investment patterns across different regions. Investors should closely monitor these regional disparities and their potential impact on real estate portfolios.

Home sales are rising in most major U.S. metros as housing payments sit near their lowest level since January, but they’re falling in coastal Florida as hurricanes hit the southeastern U.S. Mortgage rates rebounded over the weekend; that could soon begin to impact homebuyer demand.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Pending U.S. home sales rose 2% from a year earlier during the four weeks ending October 6, the biggest increase in three years, according to a new report from Redfin, the technology-powered real estate brokerage.

Demand picked up at earlier stages of the homebuying process, too. Redfin’s Homebuyer Demand Index–a measure of tours and other buying services from Redfin agents–sat near its highest level since May last week, and mortgage-purchase applications are up 8% month over month. New listings are also rising, with a 5.7% year-over-year uptick. But unlike the increase in pending sales, that’s a continuation of a trend; new listings have been increasing for nearly a year.

Pending sales improved because buyers came out of the woodwork in late September after the Fed’s interest-rate cut, even though mortgage rates had already been declining for several weeks in anticipation of the cut. Falling mortgage rates have pushed the typical homebuyer’s housing payment down to $2,526, near its lowest level since January and down 5.8% year over year. It’s worth noting that this compares to a period last year when sales waned as mortgage rates surged to 7.5%.

Mortgage rates jumped over the weekend, which could deter some buyers in the coming weeks

The improvement in sales may slow in the coming weeks, as mortgage rates started rising last Friday after a surprisingly strong jobs report. Daily average mortgage rates jumped to 6.62% on Monday from 6.26% last Thursday. Some buyers may back off due to rising rates, but not all of them: Mortgage rates are still significantly lower than they were a year ago–and lower than earlier this year–and the Fed is on track to continue cutting interest rates.

“House hunters are monitoring mortgage rates closely, but so far, the increase in rates isn’t slowing buyers down. The home I listed on Thursday got a lot of traffic over the weekend and received 10 offers,” said Shoshana Godwin, a Redfin Premier agent in Seattle. “I’m advising buyers to make an offer if they love a home; don’t try to time the market. Rates have swung down and then up over the last few weeks, and we don’t know exactly what will happen in the next few weeks. A buyer may lock in a slightly higher rate now than they would have two weeks ago, but if they wait, it’s possible rates will increase more. It’s also possible rates drop more significantly, which could heat up competition.”

Sales are falling in coastal Florida, partly due to Hurricane Helene

Pending home sales are rising in most major metros, but they’re falling in some places, most notably Florida. In West Palm Beach, pending sales fell 17.6%, the biggest decline of the 50 most populous U.S. metros, followed closely by Tampa (-15.5%) and Miami (-14.8%). That’s due partly to Hurricane Helene, but coastal Florida’s housing market has been slowing over the last several months as insurance and HOA costs surge due to the increasing prevalence of climate disasters.

Hurricane Helene–and Hurricane Milton, which hit just days later–may have a bigger impact on future home sales; a recent Redfin survey found that nearly one-third of young adults are reconsidering where they want to move after seeing or hearing about damage caused by the hurricane.

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

Indicators of homebuying demand and activity
	Value (if applicable)	Recent change	Year-over-year change	Source
Daily average 30-year fixed mortgage rate	6.61% (Oct. 9)	Up from 6.11% 3 weeks earlier	Down from 7.7%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.12% (week ending Oct. 3)	Up from 2-year low of 6.08% a week earlier	Down from 7.49%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Essentially unchanged from a week earlier (as of week ending Oct. 4)	Up 8%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Near highest level since May; up 5% from a month earlier (as of week ending Oct. 6)	Up 2%   Biggest increase in about a year	Redfin Homebuyer Demand Index a measure of tours and other homebuying services from Redfin agents
Touring activity		Down 8% from the start of the year (as of Oct. 6)	At this time last year, it was down 9% from the start of 2023	ShowingTime, a home touring technology company
Google searches for “home for sale”		Down 2% from a month earlier (as of Oct. 6)	Down 11%	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending Oct. 6, 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 Oct. 6, 2024	Year-over-year change	Notes
Median sale price	$383,225	4%
Median asking price	$399,925	5.7%	Biggest increase in 2 years
Median monthly mortgage payment	$2,526 at a 6.12% mortgage rate	-5.8%	Near lowest level since January   Nearly $300 below April’s all-time high
Pending sales	77,951	2%	Biggest increase in nearly 3 years
New listings	89,388	5.7%
Active listings	1,041,247	18%	Smallest increase since April
Months of supply	3.9	+0.7 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	34.2%	Down from 40%
Median days on market	39	+7 days
Share of homes sold above list price	26.1%	Down from 31%
Average sale-to-list price ratio	98.8%	-0.4 pts.

Metro-level highlights: Four weeks ending Oct. 6, 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	Newark, NJ (11.4%) Nassau County, NY (11.1%) Milwaukee (10%) Chicago (9.7%) Cleveland (9.7%)	Austin, TX (-4.8%) Tampa, FL (-2.1%) San Antonio (-2%) Oakland, CA (-1.9%) Fort Worth, TX (-0.6%)	Declined in 5 metros
Pending sales	Phoenix (14.1%) Seattle (12.3%) San Jose, CA (11.6%) San Antonio (11.6%) Virginia Beach, VA (11.2%)	West Palm Beach, FL (-17.6%) Tampa, FL (-15.5%) Miami (-14.8%) Fort Lauderdale, FL (-12.8%) Atlanta (-12.5%)	Increased in 32 metros
New listings	San Jose, CA (24.8%) Phoenix (21.6%) New Brunswick, NJ (19.9%) Seattle (18.5%) Baltimore, MD (17.2%)	Atlanta (-18.1%) Tampa, FL (-16.7%) San Antonio (-12.9%) West Palm Beach, FL (-8.2%) Austin, TX (-5.6%)	Declined in 9 metros

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

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/20241010025574/en/

Redfin Journalist Services:

Tana Kelley

press@redfin.com

Source: Redfin

FAQ

What was the year-over-year change in pending home sales for Redfin (RDFN) as of October 6, 2024?

Pending home sales rose 2% year-over-year during the four weeks ending October 6, 2024, according to Redfin (RDFN).

How much did the typical homebuyer's monthly payment change according to Redfin's (RDFN) report?

The typical homebuyer's monthly payment decreased to $2,526, which is down 5.8% year-over-year, according to Redfin's (RDFN) report.

What was the year-over-year change in new listings reported by Redfin (RDFN)?

New listings increased by 5.7% year-over-year, as reported by Redfin (RDFN).

How did Hurricane Helene affect the housing market in Florida according to Redfin's (RDFN) report?

Hurricane Helene contributed to falling pending home sales in coastal Florida, with West Palm Beach experiencing a 17.6% decline, the largest among major U.S. metros, according to Redfin's (RDFN) report.