Pending sales are down 8 percent, the biggest decline in four months, according to a new report from Redfin.
Daily average mortgage rates posted their biggest one-day increase in over a year on Feb. 2. The jump came after a hotter-than-expected January jobs report and the Fed’s confirmation that they’re unlikely to cut interest rates in the next two months, which means mortgage rates will probably remain elevated near their current level for at least that long.
“We’re seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn’t up as much as we would expect at this time of year,” Chen Zhao, Redfin’s economic research lead, said in a release. “That’s because mortgage rates are climbing again and winter weather has been harsher than usual in much of the country, keeping some house hunters at home.”
Rising home prices are exacerbating rising rates, with the typical monthly mortgage payment just about $100 shy of October’s all-time high. High housing costs are pricing out many would-be homebuyers. There are also a few other contributors to sales falling, according to Redfin: Harsh winter weather in the first half of January delayed a lot of homebuying deals, and pending sales were improving at this time last year as mortgage rates temporarily dropped.
Still, some house hunters are at least getting a feel for the market. Redfin’s Homebuyer Demand Index has steadily risen since mid-January, and a separate measure of home tours shows they’ve increased 16 percent since the start of the year, compared with a 10 percent rise at this time last year. Some sellers are jumping in, too, with new listings up 7 percent year-ove-year, Redfin added.
Luis Rojas, a Redfin Premier agent in the Viera West, Fla., area, said today’s housing market is touch and go.
“High mortgage rates brought the local market to a near-standstill from August through November, activity picked up when rates dropped a bit in mid-December, and now it’s slowing down again as rates rise,” he said. “I’m advising buyers – especially first-timers – that the mortgage rates they see in the news aren’t the be-all and end-all. Some local lenders are willing to give rates in the 5 percent range for new construction projects because any business is better than no business.”