Rising Rates Haven’t Slowed Pending Sales

SEATTLE – Pending U.S. home sales rose 3.2% year over year during the four weeks ending October 13, the biggest increase in three years, according to a new report from the real estate brokerage Redfin.

Home sales are rising. On a local level, pending sales are up in 34 of the 50 most populous U.S. metros, with the biggest increases in California and in Portland, OR. Sales have improved over the last month because mortgage rates fell to a two-year low at the end of September amid the Fed’s highly anticipated interest-rate cut. Please note that Redfin is comparing to a period in 2023 when sales slumped as mortgage rates approached a two-decade high.

Mortgage rates are rising. Mortgage rates have ticked up over the last few weeks, largely due to a stronger-than-expected jobs report on October 4: The weekly average 30-year rate is 6.32%, compared to 6.08% during the last week of September. Home prices are also rising, with the median sale price posting a 4.7% year-over-year increase, the biggest uptick since March. That has pushed the typical homebuyer’s monthly payment up nearly $100 from a month ago.

Home tours and mortgage-purchase applications have flattened out. Rising rates have slowed demand somewhat at earlier stages of the homebuying process. Some would-be buyers seem to be waiting for rates to come back down: Redfin’s Homebuyer Demand Index — a measure of tours and other buying services from Redfin agents — has fallen marginally from the six-month high it hit two weeks ago, though it is up 7% year over year. And mortgage-purchase applications are down 7% week over week, but they are still trending up from a year ago.

Sellers are taking a small step back as rates rise: New listings are up 3.6% nationwide, the smallest year-over-year increase in a month.

“So far, higher rates haven’t slowed buyers down in the Minneapolis area. But buyers are negotiating more heavily than they have in years, trying to shave money off the home price because they’re taking on a pretty high rate,” said Emily Olson, a Redfin Premier agent in Minneapolis. “It’s a good strategy, because sellers are receptive to it. Sellers know every buyer taking on a mortgage is contending with high rates, and they would rather get their house sold now than let it linger on the market going into the holiday season.”

• Metros with biggest year-over-year increases in median sale prices: Fort Lauderdale, FL (11.2%)

• Metros with biggest year-over-year decreases in median sale prices: Tampa, FL (-0.5%) 

• Metros with biggest year-over-year decreases in pending sales: Tampa, FL (-27.5%), West Palm Beach, FL (-18.4%), Fort Lauderdale, FL (-14.5%), Miami (-13.8%), Orlando, FL (-12%)

• Metros with biggest year-over-year decreases in new listings: Tampa, FL (-36.1%), West Palm Beach, FL (-13.2%), Orlando, FL (-12%), Fort Lauderdale, FL (-6.9%)

Source: Redfin

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