While reports on August home sales came back weak, Redfin predicts that the wave of homebuyers is just about ready to break loose after the Federal Reserve’s 50-basis point increase last week.
Rate lock data from Optimal Blue shows some of the tell-tale signs: homebuyers locked in nearly 70% more mortgages by September 23 than they did a month earlier. The sudden rise of mortgage rate locks came five days after the Fed cut interest rates for the first time in four years. However, Redfin’s report noted that the surge in mortgage demand could be overstated due to buyers delaying their home purchases in order to lock in their rate after the Fed meeting. Still, other indicators from Redfin’s report show that mortgage demand is improving.
Besides mortgage rates, another factor that could be influencing market activity is the NAR settlement; however, the 2024 August Agent Survey from The Real Brokerage noted minimal market disruption and increased optimism among buyer agents due to declining mortgage rates.
Mortgage Demand Shoots Up
Another indicator of improved mortgage demand was the rise in mortgage purchase applications in September, up by more than 10% from August.
Additionally, nationwide pending home sales fell 3.1% during the four weeks ending on September 22, albeit the smallest decline in five weeks. Yet, increases in mortgage-rate locks and mortgage applications are expected to cause an uptick in sales over the next few weeks.
Redfin’s Homebuyer Demand Index, which tracks the number of tours and other buying services from Redfin agents, shot up to its highest level since May this September. The Demand Index also rose 1% annually, the first increase in nearly a year.
The median monthly housing payment is down 4.4% year over year, the biggest decline in more than four years, thanks to the drop in mortgage rates. Meanwhile, new listings of homes for sale are up 7.6% year over year, marking the biggest increase since June.
Declining Mortgage Rates Boost Agent Optimism
The August 2024 Agent Survey from The Real Brokerage revealed early insights on the impact of the National Association of Realtors’ (NAR) settlement on residential home sales.
“While it's still early days, our internal data shows no significant changes in average commission rates for buy-side or sell-side transactions since the rule changes took effect,” said The Real Brokerage Chairman and CEO Tamir Poleg. “This stability suggests buyers and sellers continue to recognize the essential role agents play in navigating a home sale transaction, which is often the largest financial decision of an individual’s life.”
Agents surveyed were asked if they were more optimistic or pessimistic about the outlook for their primary market over the next year, compared to the month prior. Thirty-eight percent felt more optimistic, with an additional 9% feeling significantly more optimistic. This outweighed the 11% feeling more pessimistic and 4% significantly more pessimistic. Meanwhile, 38% of agents remained neutral.
Among the report’s other key findings, agents surveyed have largely found it easy to secure buyer representation agreements under the new rules, with 65% reporting the process is either “very easy” (32%) or “somewhat easy” (33%). Only a small fraction of agents (16%) have encountered challenges in this area.
When asked, “Have you noticed any change to overall market activity (e.g. buyer interest, listings) since the rule changes?,” more than half (55%) of agents reported no significant change since the rule changes took effect on August 17. A combined 12% of agents saw slight or significant increases; 26% observed a slight decrease, and 6% noted a significant decrease.
Despite concerns about commission compression, 55% of agents reported that sellers are offering to pay buy-side commissions of 2.5% or greater. Meanwhile, 30% of agents noted that sellers are offering commissions below 2.5%, and only 1% have observed a shift toward flat fee models, suggesting these remain uncommon.
