What has the impact been on buyers?
The housing market saw its biggest increase in average home-sale prices in the US since October 2022 with a 6.1% increase year-over year in the four weeks ending on February 11, a report by Redfin, a real estate brokerage, found.
Mortgage rates are also rising which has driven prices to increase further, with the daily average rates reaching above 7%. Pending home sales have decreased by 7.3% year-over-year, with Redfin’s Homebuyer Demand Index down by 18%.
The report stated that apart from the high housing costs, seasonal factors like the extreme storms in Southern California, the Lunar New Year, and the Super Bowl kept those who may have been looking for houses to buy, at home. Home sellers were seen to be more active than buyers as new listings have increased by 8% year-over-year.
“The Super Bowl is like Groundhog Day for real estate economists; we usually have a read on how the market is shaping up by the beginning of February, and the read this year is that it’s looking sluggish so far, mostly because of stubbornly high mortgage rates,” said Chen Zhao, Redfin’s economic research lead.
Zhao noted the central bank was unlikely to cut interest rates in the next month, which means that mortgage rates will be staying near 7% in the meantime.
“Activity should pick up a bit in the spring, partly because it’ll be selling season and partly because people are getting more and more accustomed to elevated rates. We expect mortgage rates to start declining later in the spring as inflation eases and the Fed finally starts cutting interest rates,” said Zhao.
Christine Kooiker, a Redfin Premier agent, has been encouraging homeowners who were considering selling their homes to list them soon.
“A lot of sellers want to wait until spring, but I’m telling people to consider listing in the next few weeks because even though demand is fairly slow, there’s hardly anything else on the market,” she explained.
“Buyers may want to act sooner rather than later, too, because prices will continue to go up. I have a few clients who waited to make an offer, or made an offer that was too low, and now they regret it because a house they love got snatched up,” Kooiker added.
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