Pending home sales in the United States hit their highest level since September 2022 during the four weeks ending May 3, according to a new report from online brokerage Redfin.
The brokerage said there are a few reasons homebuyers are coming off the sidelines:
Housing costs came down temporarily. Redfin noted that the median U.S. housing payment fell 2.2% year over year as mortgage rates ticked down. Rates fell to 6.23% last week from a six-month high of 6.46% two weeks earlier. Redfin said that daily average rates rose as high as 6.56% because of jitters about renewed fighting and uncertainty in Iran.
There are more houses on the market. The total number of homes for sale rose about 1% year over year to near their highest level in at least five years. When there are more homes to buy, there are more sales, Redfin noted.
Seasonality is kicking in later than usual. Redfin said that spring is typically the busiest time of year for the housing market. A recent Redfin analysis found that late April is the best time of year to list a home for sale because they are more likely to sell above their asking price, and to sell quickly. The big increase in seasonally adjusted pending sales could signal that spring homebuying season is starting late, Redfin noted.
Slower, Less Competitive
The market is slower and less competitive than past springs, Redfin said.
The typical home that sells goes under contract in 43 days, three days longer than a year ago, the brokerage noted. Just over one-quarter (26.4%) of homes that go under contract are selling above asking price, Redfin said. That’s the lowest share for this time of year in at least five years.
“Some homes are attracting multiple offers, but only those that are priced fairly and have been updated,” said Ashley Arzer, a Redfin Premier agent in Chicago. “A new kitchen and new bathroom are the ticket to a bidding war. Older homes that need repairs, and those far above the most popular price range—around $400,000 in Chicago—are taking longer to sell.”
In April, the National Association of Realtors said that pending home sales in March rose by 1.5% from the previous month and declined 1.1% year over year, according to its Pending Home Sales report.
Previous Reports
NAR noted that month-over-month pending home sales rose in the Northeast and South, and declined in the Midwest and West. Year-over-year pending home sales rose in the South, while declining in the Northeast, Midwest, and West.
Redfin earlier reported that in the biggest decline in three months, U.S. pending home sales fell 2.4% year over year during the four weeks ending April 5.
The online brokerage said that sales fell most in Providence, Rhode Island (-15.5%), Houston (-15.4%) and New York (-15.3%). Pending sales increased most in West Palm Beach, Florida (20.9%), San Francisco (16.7%), and San Jose, California (11.4%).
Redfin noted that homes were selling slowly. It said the The typical home that went under contract did so in 51 days nationwide, the longest span for this time of year since 2019.
