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As home price growth has slowed, mortgage payments have decreased and days on market have risen, homebuyers are dipping their toes back into the market again, a new report from Redfin says.
The typical U.S. home sold for nearly $40,000 less during the four weeks ending Dec. 18 than it did during a peak in June of $391,000. Average mortgage rates also dropped to 6.27 percent, taking about $300 off the typical homebuyer’s monthly housing payment since rates peaked in late October at 7 percent. Meanwhile, the typical home for sale sat on the market for 39 days before going under contract, its longest period since August 2020.
Mortgage purchase applications also saw a substantial increase, with applications up 4.6 percent month over month. Redfin’s Homebuyer Demand Index, which follows requests for Redfin’s home tours and other homebuying services, was also up 6.5 percent.
“Quite a few buyers have come out of the woodwork in the last few weeks as rates have fallen,” Seattle Redfin agent Shoshana Godwin said in a statement. “Many people who were outbid on multiple homes during the buying boom want to seize this moment because they can take their time touring homes and negotiate on price and terms with sellers. Today’s market isn’t nearly as hot as it was earlier this year and I don’t expect it to return to those levels. But it’s getting warm.”
So far, the slight increase in demand has not contributed to an increase in pending home sales or new listings, Redfin’s report said. The change is unlikely to reflect in that data until mid-January due to a slowdown over the holidays, and because new listings will likely not recover until spring, Redfin economists said.
During the four weeks ending Dec. 18, U.S. home sale prices dropped year over year in 14 of the 50 most populous metro areas in the U.S., compared to only five metros during the previous reporting period.
Some of the most significant price declines were in some of the nation’s priciest cities. In San Francisco, prices dropped 9 percent year over year; in Pittsburgh, 6.2 percent year over year; in San Jose, 5.8 percent year over year; and in Los Angeles, 4.7 percent year over year. Prices also fell in New York on an annual basis for the first time since June 2020; however, the decline was by less than 1 percent.
