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Homebuyers are returning to the market in droves as mortgage rates and home prices gradually tick down, according to new data released Friday by Redfin.
Mortgage applications increased in each of the past four weeks over a period ending March 26, according to the Redfin’s Homebuyer Demand Index, the brokerage’s in-house measure of buyer demand. Over the past month, the index jumped to its highest level since May 2022, indicating a surge of activity as the spring home buying season kicks off.
“My phone is ringing, and it’s usually first-time buyers or investors,” San Francisco Redfin agent Ali Mafi said in a statement. “First-time buyers are interested in looking at homes because prices have come down, though they’re still concerned about high mortgage rates. Investors who can pay in cash are honing in on luxury San Francisco condos because prices on those have dropped even more significantly than the overall market.”
While buyer activity is increasing month over month, home sales still sag below levels seen last spring. Pending home sales were down 21.1 percent year over year in February, but have increased monthly for three-consecutive months, according to data from the National Association of Realtors.
Existing-home sales also shot up in February, increasing by 14.5 percent after falling for 12 straight months. Sales remained 22.5 percent lower than 2022 levels, however.
The Redfin report found unequal distribution of price drops across the country due to extremely low inventory, with prices dropping in some parts of the country and rising in others.
Prices dropped in 28 of the 50 most populous United States cities, with the biggest drop seen in Austin where prices fell by 15.2 percent year over year. Following Austin was four Californian cities with San Jose at 12.9 percent, San Francisco at 11.7 percent Sacramento at 11.4 percent and Oakland at 10.8 percent.
In line with a recent trend of home prices decreasing in the West and increasing in the East and Midwest, prices increased the most in Milwaukee where they rose 14.1 percent year over year, followed by Fort Lauderdale at 8.5 percent, Virginia Beach at 6.9 percent, West Palm Beach at 6.7 percent and Providence, Rhode Island at 6.4 percent.
“Prices are still rising quickly in some places while they are down by double digits in big tech hubs, so it’s important for prospective buyers to work with an expert local agent,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “One thing that’s true almost everywhere: It’s difficult to find a desirable, well-priced home for sale, so offer and negotiation strategies differ depending on where you’re looking.”
The national median home sale price fell 1.8 percent year over year to $360,500 during the week of March 26th — the sixth-straight week of annual declines after more than a decade of increases.
