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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. 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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