Pending home sales began the year at their lowest levels since 2015, with the biggest drop-offs seen in pandemic-era hot spots, according to new data released Thursday by Redfin.
U.S. pending home sales dropped 32 percent annually during the four-week period ending Jan. 1, with the biggest drop-offs recorded in markets that took off during the pandemic such as Las Vegas, Phoenix and Austin, according to Redfin. Pending sales in each of those cities fell by more than 50 percent.
Signs of homebuyer demand were mixed in December, with Redfin’s Buyer Demand Index — an in-house gauge of demand that looks at tour requests and other homebuying services — rising 8 percent from two weeks earlier, while mortgage purchase applications fell 12 percent. The dramatic decline in mortgage purchase applications could likely be chalked up to severe winter storms hitting large parts of the U.S., the report notes.
Home prices fell in 19 of the 50 most populated U.S. cities in December, according to the Redfin data, dropping 10.4 percent annually in San Francisco, 6 percent in Sacramento and 5.6 percent in San Jose.
The typical home sold for $350,000, up just 0.5 percent from December of 2021, only slightly slower than the annual growth rate of 0.7 percent seen at the beginning of the pandemic when the housing market ground to a near halt.
The current market could provide an opportunity for buyers who may be flush with cash but were unable to score a home earlier in 2022 due to intense competition, one Redfin agent surmised.
“Two categories of buyers are starting their search right now: First-timers hoping prices and competition are more manageable than they have been over the last few years, and returning buyers who took a break after losing out on multiple homes during the pandemic bidding-war frenzy,” Seattle Redfin agent Shoshana Godwin said.
“They should be able to take their time and find a home for a slightly lower price than last year, but the market will likely become more competitive over the next few months,” Godwin added. “I expect new listings to remain scarce as homeowners hold onto low interest rates while the pool of determined buyers circle the few homes that are available.”
