New listings climbed 1.4% month over month in September, the largest increase since February 2022 on a seasonally adjusted basis, according to a new report from Redfin.
“A lot of Americans are sitting on piles of money in their homes, and some are opting to cash out even if it means giving up their low mortgage rate; they’re worried there’s a possibility home prices will fall if rates remain elevated. We expect rates to remain high for the foreseeable future,” says Redfin Chief Economist Daryl Fairweather. “But we also expect prices to stay high into next year. Housing supply is so strained that even a small uptick in listings lures buyers off the sidelines, bolstering sales.”
Still, new listings dropped 8.9% on a year-over-year basis in September and remained far below pre-pandemic levels. That’s because mortgage rates hit the highest level in more than two decades, with the average weekly 30-year-fixed rate clocking in at 7.2%. It has since moved even higher, last week hitting a weekly average of 7.63%, and 8% on a daily basis.
The overall supply of homes for sale (active listings) rose 1.9% month over month in September on a seasonally adjusted basis, the largest gain since last summer. But active listings fell 16.9% from a year earlier and remained near the lowest level on record as homeowners continued to feel locked into their low mortgage rates.
Pending home sales rose 1.3% month over month to the highest level in nearly a year on a seasonally adjusted basis as more listings hit the market. They were down 12.1% from a year earlier.
But while pending sales – the number of homes going under contract – improved in September, closed sales fell to the lowest level since the onset of the pandemic. They dropped 1.5% from a month earlier and 12.8% from a year earlier on a seasonally adjusted basis.
Pending sales ticking up and closed sales ticking down can be explained partly by a high portion of buyers backing out of contracts due to rising mortgage rates. Roughly 53,000 U.S. home-purchase agreements were canceled in September, equal to 16.3% of homes that went under contract that month – the highest percentage since October 2022, when mortgage rates surpassed 7% for the first time in two decades. That compares with 15.2% a month earlier and 15.8% a year earlier.
The median U.S. home sale price rose 1.9% year over year to $412,081 in September, and fell 2% from a month earlier – typical for this time of year.
Activity in the housing market is sluggish due to high mortgage rates, but prices remain near their record high because the buyers who are out there are competing for a limited number of homes.
Nearly two of every five homes (37.4%) that went under contract in September did so within two weeks, up from 32.6% a year earlier—a sign of homebuyer competition. Starter homes are particularly competitive right now, Redfin agents say, because housing affordability has fallen so dramatically.
To view the full report, click here.