Pending U.S. home sales dropped 32% year-over-year to their lowest level since at least 2015 during the four weeks ending January 1, according to a new report from Redfin.
Some of the largest declines were found in the pandemic homebuying hotspots of Las Vegas, Phoenix, and Austin, which each saw pending sales plummet more than 50%. The housing market fizzled out at the end of 2022 due mortgage rates in excess of 6%, continued fears of a recession, record-low new listings, extreme winter weather, and the typical seasonal holiday housing market slowdown.
Signals of early-stage demand are mixed. Redfin’s seasonally adjusted Homebuyer Demand Index–a measure of tour requests and other buying services from Redfin agents–was up 8% from two weeks earlier.
In addition, closing out 2022, the Mortgage Bankers Association (MBA) reported mortgage applications fell 13.2% for the week ending December 30, 2022.
“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,” said Seattle Redfin Agent Shoshana Godwin. “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. I expect new listings to remain scarce as homeowners hold onto low interest rates while the pool of determined buyers circle the few homes that are available.”
Redfin reported that the typical U.S. home sold for $350,000 during the four weeks ending January 1, 2023—up just 0.5% from a year earlier, and slightly slower than the 0.7% growth reported at the outset of the pandemic. Home prices nationwide were down 10% from the June peak. On a metro level, home-sale prices fell year-over-year in 19 of the 50 most populous U.S. metros covered by Redfin during the four weeks ending January 1, 2023. By comparison, just 10 metros saw price declines a month earlier.
Markets where it was reported that prices fell were found in:
- San Francisco where prices fell 10.4% year-over-year
- Sacramento, California where prices fell 6% year-over-year
- San Jose where prices fell 5.6% year-over-year
- Los Angeles where prices fell 5.4% year-over-year
- Detroit where prices fell 4.6% year-over-year
- Oakland, California where prices fell 4.4% year-over-year
- Seattle where prices fell 4.2% year-over-year
- Pittsburgh where prices fell 3.9% year-over-year
- Austin, Texas where prices fell 2.9% year-over-year
- New York where prices fell 2.8% year-over-year
- Phoenix where prices fell 2.4% year-over-year
- Boston where prices fell 2.2% year-over-year
This marks the biggest year-over-year drop for San Francisco prices since at least 2015. Home prices fell 2% or less in Anaheim, California; Chicago; Riverside, California; Washington, D.C.; San Diego; Portland, Oregon; and Newark, New Jersey.
Google searches for “Homes for Sale” started to rise from the low reached in November during the week ending December 31, 2022, but they were down about 33% from a year earlier. Home touring activity as of December 29 was down 63% from the start of the year, compared to a 54% decrease at the same time last year, according to home tour technology company ShowingTime.
Click here for more on Redfin’s study on pending home sales.