Mortgage applications and Redfin’s demand index, a measure of tours and other homebuying services, are up as mortgage rates continue to come down. But pending home sales declined and the number of homes on the market increased as buyers took a break over Thanksgiving.
Homebuying demand has started ticking up as mortgage rates continue their steady decline. Daily rates dipped to 6.29% on December 1, down one full percentage point from a peak of 7.29%, hit one month earlier. Mortgage-purchase applications are up 4% from a week ago and Redfin’s Homebuyer Demand Index is up about 1.5% from a month ago.
Price drops are becoming less common now that mortgage rates in the 6.5% range are thawing still-cool homebuyer demand. Just over 6% of homes for sale each week during the four weeks ending November 27 on average had a price drop, down sharply from 7.2% a week earlier and the lowest level since July.
“There have been a handful of pieces of relatively good news for the housing market lately, but we’re far from out of the woods. Key indicators of homebuying demand will likely be teetering on a knife’s edge with every data release that comes out related to the Fed’s path to eventually bringing rates down,” said Redfin Deputy Chief Economist Taylor Marr. “We’re likely past peak inflation, past peak mortgage rates and past the bottom for mortgage purchase applications. But there’s further cooling ahead for the housing market, as sales and prices have further to fall before buyers and sellers become comfortable with homebuying costs again.”
Months of supply–a measure of the balance between supply and demand, calculated by dividing the number of active listings by closed sales–hit 4.1 months during the four weeks ending November 27, up sharply from the prior four-week period and the highest level since May 2020. The supply of homes for sale posted its biggest year-over-year increase on record even as new listings declined by double digits, indicating homes lingered on the market over Thanksgiving week.
Among the 50 most populous U.S. metros, home-sale prices fell from a year earlier in 10 of them. Prices fell 8.2% year over year in San Francisco, 2.8% in San Jose, CA, 2.7% in Pittsburgh, 2.3% in Detroit, 1.7% in Sacramento and 1.3% in Austin. They declined less than 1% in Chicago, San Diego, Los Angeles and Philadelphia.
This marks the first time Austin and Los Angeles home prices have fallen on a year-over-year basis since mid-2019. It’s the first time Chicago prices have fallen since June 2020.
Unless otherwise noted, the data in this report covers the four-week period ending November 27. Redfin’s weekly housing market data goes back through 2015.
Refer to our metrics definition page for explanations of all the metrics used in this report.
