Pending home sales increased 2% on an annual basis during the four weeks ended October 6, the biggest increase in three years, according to Redfin.
However, the firm notes that the impact of Hurricane Helene and Hurricane Milton will likely put a dent in home sales in the months to come.
In addition, mortgage rates have gone back on the rise, which will also slow home sales.
The firm says purchase applications increased 8% month-over-month.
In addition, new listings are up 5.7% year-over-year.
The increase in pending sales was primarily because buyers came out of the woodwork in late September after the Fed’s rate cut. Mortgage rates had already been declining for several weeks in anticipation of the cut.
Falling mortgage rates have pushed the typical homebuyer’s housing payment down to $2,526, near its lowest level since January and down 5.8% year over year, Redfin says.
It’s worth noting that this compares to a period last year when sales waned as mortgage rates surged to 7.5%.
The improvement in sales may slow in the coming weeks, as mortgage rates started rising last Friday after a surprisingly strong jobs report. Daily average mortgage rates jumped to 6.62% on Monday from 6.26% last Thursday, according to the firm’s data.
Some buyers may back off due to rising rates, but not all of them: Mortgage rates are still significantly lower than they were a year ago and are lower than earlier this year.
“House hunters are monitoring mortgage rates closely, but so far, the increase in rates isn’t slowing buyers down,” says Shoshana Godwin, a Redfin Premier agent in Seattle. “The home I listed on Thursday got a lot of traffic over the weekend and received 10 offers. I’m advising buyers to make an offer if they love a home; don’t try to time the market. Rates have swung down and then up over the last few weeks, and we don’t know exactly what will happen in the next few weeks. A buyer may lock in a slightly higher rate now than they would have two weeks ago, but if they wait, it’s possible rates will increase more. It’s also possible rates drop more significantly, which could heat up competition.”
Photo: Phil Hearing