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Christmas came early for buyers and sellers who have both been waiting for rates to drop.
Mortgage rates are still higher than they were a year ago, but the ongoing slide is enticing sellers to list homes and buyers to make offers, according to a report Redfin released on Friday.
New listings, pending sales and prices all rose in November, the report showed.
The number of total active listings was down 7.9 percent in November compared to a year before. However, the number of new listings rose 1.3 percent from October to November to the highest level in over a year, and sliding rates were enough to push buyers and sellers into action despite rising prices.
“Buyers and sellers are learning to live with uncertainty,” Shay Stein, a Redfin Premier real estate agent in Las Vegas, said in a statement. “They’ve realized no one has a crystal ball that can predict exactly when mortgage rates will fall back to 5 percent, so they’re making moves now because they can only wait so long to be near their grandkids, live in an RV like they’ve always dreamt of or finalize their divorce.”
Pending home sales rose 2 percent from October to November on a seasonally adjusted basis, Redfin reported. Pending sales were still down 0.1 percent from a year before but have been slowly climbing since bottoming out this spring.
The median home sold for $408,732 in November, Redfin said, 3.7 percent more than a year before and the biggest monthly jump in over a year. That’s within the typical monthly price growth seen before the pandemic sent prices soaring at unprecedented levels.
Mortgage rates drop on Fed policy shift
At 6.68 percent Thursday, rates on 30-year fixed-rate mortgages are still higher than they were a year ago, when they were at 6.31 percent, according to rate lock data collected by Optimal Blue.
But they’re down more than a full percentage point from a 2023 peak of 7.83 percent registered Oct. 25. According to Optimal Blue data, rates on 30-year fixed-rate loans slid below 7 percent on Dec. 5 as a stream of data showed inflation easing, and mortgage rates have continued to drop in the wake of a major policy shift by the Federal Reserve Wednesday.
Fed policymakers signaled they foresee cutting short-term interest rates three times by the end of next year, and many investors and some economists think the central bank may implement one or more rate cuts by spring.
Thanks to the drop in rates, homebuyers taking out a new mortgage can expect their monthly payments to be more than $200 less than they were just a few weeks ago.
Still, buyers are canceling contracts at the highest rate since at least 2017, Redfin reported, with 16.9 percent of home purchase agreements canceled in November, up from 15.6 percent a year earlier.
Besides a spike during the onset of the pandemic, contract cancellations typically hovered between 12 percent and 14 percent over the past seven years, according to Redfin’s data.
One in four homes fell out of contract in Atlanta and Jacksonville, according to the report.
