One-third of pending home sales in the U.S. went under a contract within a week of being listed, according to new data from the brokerage Redfin Corp RDFN.
What Happened: Redfin noted the speed in home sales is uncommon for this time of year, which usually witnesses a slowing in the housing market. In a data analysis of more than 400 metro areas for the four-week period ending Oct. 10, Redfin determined pending home sales were up 4% year-over-year and up 46% compared to the same period in pre-pandemic 2019, while active listings fell 21% from 2020.
The increased demand and decreased supply contributed to a seller’s market. The median home sale price was $355,600, up 13% from one year earlier, while asking prices of newly listed homes were up 12% from the same time last year to a median of $362,047, which is 0.7% below an all-time high set during the previous four-week period ending Oct. 3.
Furthermore, 46% of homes sold above list price, up from 34% one year earlier but also the smallest share since April.
What Else Happened: Elsewhere in the housing sector, the Mortgage Bankers Association reported its Market Composite Index, a measure of mortgage loan application volume, increased 0.2% on a seasonally adjusted basis and 0.4% on an unadjusted basis from one week earlier. Both the adjusted and unadjusted Purchase Index were up by 2% from the previous week while the Refinance Index was 1% lower over the same period.
“Mortgage rates reached their highest level since June 2021, but application activity changed little this week,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, who also noted the “30-year fixed-rate reached 3.18% last week and has risen 15 basis points over the past month, resulting in an 11% drop in refinance applications during this time.”
As for housing’s near future, the ongoing economic concerns over inflation, supply chain disruptions and labor market tightness is not expected to disrupt the pursuit of homeownership, according to Doug Duncan, senior vice president and chief economist at Fannie Mae FNMA.
“Even a modest tightening of monetary policy would of course impact housing, but we expect the effects to be largely muted given current market conditions,” Duncan said. “Mortgage rates may rise in response to the tighter environment, but we expect the severe shortage of homes for sale to remain the primary driver of strong house price appreciation through at least 2022, limiting interest rate effects on home sales and home prices.
“Right now,” he added, “we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.”
Photo: Mohammed Hassan at Pixabay.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.