Home buying, listings substantially declined from last year: Redfin

Courtney Pedroza/Bloomberg

Surging mortgage rates caused a standstill in the housing market in September, with the number of homes sold dropping by 25% year-over-year, a Redfin report said.

The percentage of new listings also fell by 22%. Both declines are the largest since May 2020 and April 2020, when the onset of the pandemic brought the housing market to a halt, the report said.

With mortgage rates at the highest level in two decades and monthly payments jumping by more than 50% year-over-year, homebuyers are not as eager to purchase a house, the report noted.

At the same time, prospective sellers are holding off on selling their properties.
As a result, deals are increasingly falling through and buyer competition is plunging, the report said. 

Close to 60,000 home-purchase agreements were canceled in September – the highest percentage on record with the exception of March 2020, when the World Health Organization declared the coronavirus a pandemic.

As home buying activity dipped in September, inventory of homes available for sale increased in some cities. Austin saw the largest increase, up 41.4% year-over-year, followed by North Port, Florida (41.3%), Nashville (36.9%) and Las Vegas (34.1%).

Fewer than half (46%) of offers written by Redfin agents faced competition in September, the lowest share since the start of the pandemic, the report said.

Despite this being a drastic change from a year ago, the slow housing market may benefit first time homebuyers.

This group pulled back from the market during the pandemic due to rapidly rising home values and increased competition. But with rising mortgage rates, fewer homeowners are looking to move, creating ample opportunity for first-time purchasers, according to a Zillow report.

Buyers now have additional time to decide on a property and more power to haggle on price.

In September, the median home-sale price was down 0.5% from the previous month, though it still rose 8% on a year-over-year basis to $403,797, Redfin’s report found.

Home price gains are expected to decline to an estimated 3.2% by August 2023.