Home sales continue to decline and mortgage applications are at their lowest level in 25 years.
U.S. housing market activity is continuing to slow down as mortgage rates sit at a 20-year high. Pending home sales and new listings both saw their biggest year-over-year drops since the start of the pandemic, dipping to levels roughly on par with April 2020. Mortgage applications fell to their lowest level in 25 years, according to the Mortgage Bankers Association.
Sales are dropping more than listings. Sellers are still catching on to the prices buyers who are in the market are willing and able to pay in the face of near-7% mortgage rates. Homes are taking twice as long to sell as they did in the spring. A record share of sellers are dropping their asking price and the typical home is selling for 1% less than its final asking price–the biggest discount since August 2020.
“With rates sitting above 6.5% for three weeks and no indication they’ll come down before the end of the year, people are only buying and selling homes if they need to,” said Redfin Economics Research Lead Chen Zhao. “Prospective buyers are waiting for prices and/or mortgage rates to come down and sellers want to squeeze as much money out of their sale as possible. Homes will eventually sell, but it may take a few months, and sellers need to meet buyers where they are. That means lower prices and negotiations, including things like giving buyers a credit to buy down their mortgage rate and paying for home repairs. Prospective sellers may also consider renting out their home for a few months until demand recovers.”
“Buyers should keep similar things in mind when they’re doing the math of which homes they can afford,” Zhao continued. “Try negotiating down the sale price; now’s the time to make what would have been considered a lowball offer six months ago. Ask for concessions and repairs to make up for high mortgage rates.”
Unless otherwise noted, the data in this report covers the four-week period ending October 16. 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.
