October saw the fewest number of single-family homes under contract since 2015.
- During October, home sales fell 35%—reaching the largest annual decline since 2015, Redfin reports.
- The market for mortgage applications and pending home sales now resembles the market in 2018.
- While mortgage rates remain high, the slower market does allow buyers to better negotiate overall home prices.
Why it’s news
The continuing decline in home sales is related to climbing mortgage rates. While high mortgage rates are a problem for prospective buyers, the slower market does give them more power to negotiate with sellers.
At the end of October, 30-year mortgage rates were at 7.08%—and the number of people searching “homes for sale” on Google was down 28% from last year, Redfin reports.
Home touring activity, requests for tours, and mortgage applications have also continued to trend down.
Median housing prices are still relatively high at $365,725 but lower than the record high prices of $392,250 in June.
Monthly mortgage rates for a median home are at $2,542 with a 7.09% mortgage rate, 48% higher than a year ago.
In addition to declining home sales, listings have also declined and are 21% lower than last year. Months of supply is up to 3.1 months.
“Until this month, the pullback in the housing market could be described as something of a return to pre-pandemic conditions before sub-3% mortgage rates ignited a homebuying frenzy in 2020 and 2021. But now both mortgage purchase applications and pending sales are below 2018 levels. A four-year setback is a serious correction. With mortgage rates still elevated, we are in for further sales declines, but those should eventually bring price relief to those who need to move this winter,” Redfin economist Taylor Marr says.