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A sudden spike in interest rates and harsh winter weather have left homebuyers once again on the sidelines, according to a new report from Redfin released Thursday.
“We’re seeing a bit of a recovery with house hunters touring homes, but even early-stage demand hasn’t picked up as much as we’d expect this time of year,” Redfin economic search leader Chen Zhao said in a statement. a prepared statement. Thursday. “That’s because mortgage rates are rising again and winter weather has been harsher than usual across much of the country, keeping some house hunters at home.”
While a large portion of home sellers and buyers have come to accept higher mortgage rates, a record one-day increase in average daily rates sent a chill through consumers.
On February 2, an unexpectedly strong jobs report caused rates to rise to 6.96 percent, up 180 percent from February 1 and January 31, when rates saw the biggest drop in more than a month .
Rising rates brought the typical mortgage payment down $100 from October’s all-time high of $2,739. Higher borrowing costs, coupled with a 5.4 percent annual increase in average sales prices, have led to pending sales experiencing their largest decline (8 percent) since October.
Of the 50 most populous metropolitan statistical areas tracked by Redfin, only five markets saw an increase in pending sales in January: San Jose (+13.8 percent), San Francisco (+6 percent), Anaheim (+4, 5 percent), Riverside, California (+0.4 percent) and Columbus (+0.2 percent).
Still, Zhao is hopeful about the upcoming spring home-buying season. The economic search leader said the Redfin Homebuyer Demand Index, a seasonally adjusted measure of requests for tours and other buying services from Redfin agents, has been rising since mid-January.
Home tours have also recovered, improving six percentage points from last January (16 percent), as home sellers increase new listings by 7 percent year over year.
“High mortgage rates virtually paralyzed the local market from August through November, activity rebounded when rates fell a bit in mid-December, and is now slowing again as rates rise,” said Luis Rojas, broker. Florida-based Redfin. in the report. “I’m advising buyers, especially first-time buyers, that the mortgage rates you see on the news are not the end-all, be-all solution.”
“Some local lenders are willing to offer rates in the 5 percent range for new construction projects because any deal is better than no deal,” he added.
Email Marian McPherson