By Prashant Gopal
Housing demand is starting to show signs of recovery, with pending sales of US homes rising for the first time in more than a year, according to new data from Redfin Corp.
Pending sales climbed 2.9% in December on a seasonally adjusted basis, the first month-over-month increase since October 2021, Redfin said in a report Wednesday. Other measures of demand, including data on the brokerage’s customers requesting home tours and people contacting the company’s agents, are up from November.
“The small uptick in pending sales suggests some homebuyers returned to the market at the tail end of 2022 after demand plummeted in the fall,” said Chen Zhao, Redin Economics research lead. “Along with the dollar decline, rates traveling down instead of up are helping some sidelined buyers get back into a house-hunting mindset.”
After soaring borrowing costs battered the US housing market for months, buyers are starting to see the pressure ease up slightly. The average rate on a 30-year fixed mortgage dropped to 6.15%, the lowest level since September, Freddie Mac said last week. Loan applications have also ticked up.
“I’ve seen more homes go under contract this month than in the entire fourth quarter,” said Angela Langone, a Redfin agent in San Jose, California. “Mortgage rates aren’t stopping people as much as they were at the end of 2022, now that they’re down from their peak and sellers are more willing to negotiate.”Redfin cautioned that the situation varies from city to city and the market is still quieter than during the pandemic boom, with pending sales significantly down year-over-year in December. Redfin also warned that the market isn’t out of the woods yet and any rebound could face pressure from a potential slowdown in the economy, an inventory shortage or affordability issues that sideline more buyers.
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