Save for a spring month six years ago, pending home sales have never been lower than they were in December, the latest Redfin report reveals.
December is usually a slow month anyway, what with the holidays and all. But would-be buyers are still skittish about the economy, ever rising house prices, and high mortgage rates. And as a result, pending sales slid 5.9% compared to November.
The decline was the largest since September 2022, Redfin reported. On a year-over-year basis, pending sales were off 7.4%.
Pending sales are the market’s leading indicator. It counts properties that have gone under contract but have not yet closed. It is worth noting that not all deals close; indeed, the number of “sales” that never reach the settlement table is on the rise as buyers, for whatever reason, have a change of heart.
Buyers aren’t the only ones in retreat mode. So are sellers, largely because buyers are doing the same. Redfin says new listings dipped 1.4% month-to-month in December to their lowest level in nearly two years. Year-over-year, listings fell 4.9%.
At the same time, active listings fell 1.1% month over month — the largest seasonally adjusted decline since June 2023 — but rose 3.9% year-over-year.
The typical house that sold in December went for 1.8% less than its final list price, the largest December discount since 2022. Just 22% of homes sold for more than their final list price, the lowest December share since 2019.
Houses in the month were on the market for a median of 60 days before landing a buyer.
The news is not all bad, though. In another report, Redfin says monthly housing costs started the year down by 5%, the largest decline in more than a year as buyers gain a tad of relief from a slight dip in mortgage rates.
The median monthly housing payment slipped to $2,413 during the four weeks ending January 11, near the lowest level in two years and down 5.5% from a year earlier. That’s also the largest decline since October 2024 the brokerage firm said.
The main reason: mortgage rates are falling. The daily average mortgage rate dropped to 5.99% in early January, its lowest level in nearly three years, before ticking back up to 6.07%. And the impact has been substantial.
Buyer’s purchasing power has increased by roughly $14,000 in the last month and $30,000 in the last six months, Redfin says.
