Higher Mortgage Rates Boosting Buyer Urgency

In an unseasonable move, home prices and the rate at which they sell both ticked upwards in October, bucking trends that usually see a cooling during this time of year. 

According to a new report from Redfin, the October median home sale price increased to $357,007 which was a 1.5% increase from last month and a 13% increase from last year.  

The asking price of newly listed home also increased by 12% year-over-year to $357,381. When compared to pre-pandemic numbers the asking price of a newly-listed home has increased by an astounding 27% since 2019. 

Mortgage rates, while on the rise over the last few weeks, fell to 3.09% for the week ending November 4, prompting buyers and refinancers to take advantage of the low rates before they climb again. 

“Rising mortgage rates have lit a fire under many homebuyers,” said Redfin Chief Economist Daryl Fairweather. “Fear of missing out (FOMO) is always a powerful force in this supply-constrained housing market, but especially so today for buyers who weren’t able to snag a home last year before mortgage payments shot up by 15%. With this renewed FOMO, the housing market is heating up from the slight lull a few months ago.” 

The report, which was authored by Redfin Economist Tim Ellis, also found: 

• Pending home sales were up 5% year over year, and up 51% compared to the same period in 2019. 
• New listings of homes for sale were down 7% from a year earlier, but up 8% from 2019. 
• Active listings (the number of homes listed for sale at any point during the period) fell 22% from 2020, and were down 40% from 2019. 
• 45% of homes that went under contract had an accepted offer within the first two weeks on the market, above the 41% rate of a year earlier and the 30% rate in 2019. Since the four-week period ending September 19, the share of homes under contract within two weeks is up 1.6 percentage points. During the same time in 2019, the share fell 1.2 points. 
• 33% of homes that went under contract had an accepted offer within one week of hitting the market, up from 29% during the same period a year earlier and 19% in 2019. Since the four-week period ending September 12, the share of homes under contract within a week is up 2.6 percentage points. During the same time in 2019, the share fell 1.2 points. 
• Homes that sold were on the market for a median of 23 days, a full week longer than the all-time low of 16 days seen in late June and July, down from 31 days a year earlier and 45 days in 2019. 
• 45% of homes sold above list price, up from 35% a year earlier and 22% in 2019. 
• On average, 4.7% of homes for sale each week had a price drop, up 1.1 percentage points from the same time in 2020, up 0.1 points from 2019. 
• The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, was flat at 100.6%. In other words, the average home sold for 0.6% above its asking price.  
• From January 1 to October 31, home tours were up 0.2%, compared to a 9% increase over the same period last year, but higher than the -2% change in 2019, according to home tour technology company ShowingTime. 
• Mortgage purchase applications decreased 2% week over week (seasonally adjusted) during the week ending October 29. 

A full copy of Redfin’s report can be found here.