In the four weeks that ended on August 25, pending home sales dropped 6.9%, marking the worst annual loss in almost a year, according to a new study from Redfin. This is true even as the weekly average mortgage rate drops to its lowest point in 15 months and the median monthly home payment in the U.S. reaches its lowest point since February.
Key Indicators of Homebuying Demand & Activity:
- The daily average 30-year fixed mortgage rate was 6.37% (as of August 28), nearing the lowest level since spring 2023 and down from 7.29% year-over-year (YoY).
- The weekly average 30-year fixed mortgage rate was 6.46% (week ending August 22), representing the lowest level since May 2023 and down from 7.23% YoY, according to Freddie Mac.
- Mortgage-purchase applications (seasonally adjusted) increased 1% from a week earlier (as of the week ending August 23) and remain down 9% YoY, according to the Mortgage Bankers Association.
- Overall touring activity was up 6% from the start of the year (as of August 19), while at this time last year, it was up 2% from the start of 2023, according to ShowingTime.
- Google searches for “home for sale” were up 10% from a month earlier (as of August 26), down 3% YoY, according to Google Trends.
Agents Report Homebuyers Remain Hesitant
Due to the fact that many prospective homeowners are delaying their purchase, sales haven’t improved yet. Although some house seekers are afraid to buy right now, Redfin brokers say that house hunters are touring homes. Prospective buyers are anticipating any or all of the following:
- Clarity on the NAR settlement. On August 17, new guidelines for agency fee negotiations between buyers, sellers, and agents came into force. Before entering the market, some prospective buyers and sellers are waiting to observe how these regulations are implemented. “Some buyers have likely been scared off by agents falsely claiming that the new NAR rules require an exclusive buyer representation agreement just to tour a home,” said Jason Aleem, Redfin’s Chief of Real Estate Services. “At Redfin, we make sure buyers understand our fees before they tour, but we would never lock you into working with us before we’ve had a chance to win your business.”
- Lower home prices. The price of homes for sale is only a few thousand dollars below the record high set in early July, despite the fact that monthly payments are decreasing. This is partially due to declining inventory; the overall number of properties listed for sale experienced its lowest annual growth in the previous five months.
- Lower mortgage rates. After the Fed lowers interest rates in September, some homeowners are anticipating that mortgage rates would drop much further. (It’s important to note that a large decline in mortgage rates may result in increased competition and higher housing prices.)
- The outcome of the presidential election. Because of the political unpredictability of this year, some prospective homeowners are reluctant to make a significant purchase because they think the outcome of the presidential election may alter housing, economic, and other policies that could influence their choice to relocate.
“I expect more buyers and sellers to jump into the market in a few months, once everyone has a better understanding of how the new NAR rules will play out in actual real-estate deals,” said Fernanda Kriese, a Redfin Premier agent in Las Vegas. “The election and the drop in mortgage rates are also delaying buyers; a lot of them are waiting on the sidelines until November, hoping to get a lower rate and maybe more homes to choose from.”
Applications for mortgage purchases are down 9% from a year ago, but they are up 1% week over week on a seasonally adjusted basis, indicating that at least some purchasers are coming off the sidelines.
Key Housing Market Data
U.S. Highlights: For the four weeks ending August 25, 2024:
- The median sale price was $389,975, representing a 3.6% YoY change, up an estimated $1,000 from a week earlier, but $6,000 below all-time high set during the 4 weeks ending July 7.
- The median asking price was $395,500, representing a 5.5% YoY change.
- The median monthly mortgage payment was $2,568 at a 6.46% mortgage rate, representing a -0.4% YoY change. This is the lowest level recorded since February, an estimated $258 below all-time high set during the 4 weeks ending April 28.
- Pending sales were 79,279, representing a -6.9% YoY change, the biggest decline since October 2023.
- New listings were at 89,241, representing a 3% YoY change.
- Active listings were 990,630, representing a 16.7% YoY change, the smallest increase since April.
- Months of supply of homes were 3.6, representing a +0.7 pt YoY change. (4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions.)
- The share of homes off market in two weeks was 35.8%, down from 41% YoY.
- Median days on market was 35 days, representing a +5-day YoY change.
- The share of homes sold above list price was 28.6%, down from 34% YoY.
- Share of homes with a price drop was 6.8%, representing a +1.4 pt YoY change, the highest level on record.
- Average sale-to-list price ratio was 99.1%, representing a -0.6 pt YoY change.
To read the full report, including more data, charts, and methodology, click here.
