Redfin Reports Declining Mortgage Rates Lure Sellers Off Sidelines, Paving the Way For 2024 Buyers

Listing consults with Redfin agents have risen significantly since rates began to fall last month

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) —This week’s falling mortgage rates, sizable year-over-year increases in both new listings and listing consults with Redfin agents, and surge in housing starts all suggest that 2023’s frozen housing market is thawing. Sales are likely to climb after the typical holiday lull. That’s all according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Monthly mortgage payments are dropping. Daily average mortgage rates dropped to 6.64% this week, their lowest level since May and down from a two-decade high of 8% in late October. The median U.S. monthly mortgage payment was $2,472 during the four weeks ending December 17, down $264 from the October peak, but up 11% year over year. Rates declined quickly last week because the Fed shifted its tone, signaling more interest-rate cuts sooner than expected as the latest data points to a soft landing for the economy.

There are more homes to choose from. Redfin has seen a double-digit annual increase this week in homeowners contacting its real estate agents for help selling homes, and new listings are up 9% from a year ago—the biggest annual increase since July 2021. The uptick is partly due to falling rates, with homeowners feeling less locked in by rates in the 3% to 4% range.

Mortgage applications are up from their low point, but home sales are still falling. Mortgage-purchase applications are up 18% from their early-November low point. But that early-stage demand hasn’t yet translated into homebuying contracts: Pending home sales are down 7% year over year, similar to declines we’ve seen over the last few months, but it’s worth noting that the holidays are typically a slow season for the housing market. “The last week of economic news and data makes it more likely than not that mortgage rates have peaked,” said Redfin Economic Research Lead Chen Zhao. “Buyers will return from the holidays with more homes to choose from, and they should still see rates in the mid-6% range. But because the Fed is erring on the side of caution, there’s still a chance that rates could go back up.”

Anecdotally, dropping rates are piquing buyers’ interest. Although sales aren’t yet improving, Redfin agents and mortgage brokers are reporting that buyers are starting to act on lower rates:

• “I’m seeing an uptick in applications, an uptick in clients who had disappeared reaching back out, and an uptick in refinances.” —Mona Edick, manager at Bay Equity Home Loans, a Redfin company
• “The recent dip in rates is bringing optimism to buyers, but that’s up against a normal seasonal slowdown here in the New England market. One example of the impact of falling rates: I just put a small condo that was originally listed in early November back on the market. It attracted much more attention this time, and my seller just accepted an offer.” —Scott Driscoll, Redfin Premier agent in the Boston area
• “Buyers are excited about falling rates. Inventory in Seattle is still low right now–and not due to increase until the new year–so there’s not much for buyers to tour right now, but they’re raring to go.” —Shoshana Godwin, Redfin Premier agent in Seattle

Leading indicators

Key housing-market data

To view the full report, including charts, please visit:
https://www.redfin.com/news/housing-market-update-declining-mortgage-rates-increase-new-listings

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231221484271/en/

Redfin Journalist Services:
Kenneth Applewhaite, 206-414-8880
press@redfin.com

Source: Redfin

Released December 21, 2023