TAMPA, Fla. (WFLA) — The number of homes in the United States waiting to be sold hit a nearly seven year low, according to a new report from real estate company Redfin.
The company’s data showed the number of pending home sales dropped 32% from the year before, putting levels at their lowest “since at least 2015.” However, that designation applies to the four weeks ending on Jan. 1, meaning essentially the last month of 2022.
Redfin reported the communities with the biggest declines were in “pandemic homebuying hotspots,” specifically naming Las Vegas, Nev., Phoenix, Ariz., and Austin, Texas.
Each of those three cities had pending sales “plummet more than 50%.” However, while the number of pending sales nationally had dropped, prices rose slightly, up 0.5% compared to the same time in 2021. Still, prices themselves were down 10% for what Redfin called a June 2022 peak.
“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,” 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 said the new listings are likely to remain “scarce” to stick with low interest rates. Nationally, mortgage interest rates have been on the rise, currently 6.48% for a 30-year mortgage, according to Freddie Mac, a federally backed mortgage company.
Interest rates for home loans have been increasing steadily, with some minor fluctuations, since mid-December 2021. Since then, they’ve continued to rise, though there was a steep decrease in August, before rates again rose closer to their current levels.
The interest rates rose to just over 7% at the end of October 2022, before hovering around 6.5%, give or take a few decimals north or south.
“Mortgage application activity sunk to a quarter century low this week as high mortgage rates continue to weaken the housing market. While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023,” Sam Khater, Freddie Mac’s Chief Economist, said. “Homebuyers are waiting for rates to decrease more significantly, and when they do, a strong job market and a large demographic tailwind of Millennial renters will provide support to the purchase market.
Khater continued, saying that if the mortgage rates keep going down, borrowers who bought a home in the past year could see a chance to refinance and get a lower interest rate.