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Mortgage rates at 7-month high, lack of listings sidelining homebuyers.
On Thursday we learned that mortgage originations fell to a 23-year low in the first quarter, so a report from Redfin that pending home sales are way off isn’t a shock. According to a report from the online real estate brokerage, pending home sales during the four weeks ended May 28 fell 17% from a year earlier, one of the biggest declines since the start of the year.
The year-over-year drop is especially notable because pending sales had already started falling at this time last year, as mortgage rates shot up past 5%.Seasonally adjusted measures of homebuying demand show that it has also dipped in earlier stages of the house-hunting journey, Redfin said. Mortgage-purchase applications and Redfin’s Homebuyer Demand Index — a measure of home tours and other service requests from Redfin agents — are both down about 7% from a month ago. (June 5 2023)
Leading Indicators Of Homebuying Activity.
- For the week ended June 1, the average 30-year fixed mortgage rate was 6.79%, up from 6.57% the week before — the biggest weekly increase since October. It’s also the highest rate since November. The daily average was 6.88% on May 31.
- Mortgage-purchase applications during the week ended May 26 decreased 3% from a week earlier, seasonally adjusted. Purchase applications were down 31% year over year.
- The seasonally adjusted Redfin Homebuyer Demand Index was down 4% from a week earlier during the week ended May 28. It was up 1% from a year earlier, the first annual increase in over a year, which reflects the fact that demand was dropping at this time in 2022 as mortgage rates rose.
- Google searches for “homes for sale” were down 12% from a month earlier during the week ended May 27, and down about 13% YOY.
- Touring activity as of May 29 was up 2% from the start of the year, compared with a 6% increase at the same time last year, according to home tour technology company ShowingTime
(June 5, 2023)
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