A brief decline in mortgage rates was enough to bring more homebuyers back into the market, pushing U.S. pending home sales to their highest level since early May even as new listings fell to their lowest level since January, according to a new report from Redfin.
Pending home sales rose 1.3% week over week on a seasonally adjusted basis during the four weeks ending July 5 and were up 6.3% from a year earlier. The improvement coincided with a temporary decline in mortgage rates that lowered borrowing costs before rates moved higher again.
The weekly average 30-year fixed mortgage rate fell to 6.43% for the week ending July 2, its lowest level in six weeks, after easing geopolitical tensions in the Middle East helped calm financial markets. That pushed the median monthly housing payment down to $2,598, also the lowest level in six weeks.
The relief proved short-lived. By July 8, the daily average 30-year fixed mortgage rate had climbed back to 6.68%.
"The housing market is kicking off the summer by showing a bit of resilience," said Chen Zhao, Redfin's head of economics research. "While near-record prices and a lack of new listings are keeping many would-be buyers on the sidelines, there are enough house hunters hitting the pavement to push pending sales up. If that trend continues, we may get more fresh listings from sellers hoping to take advantage of demand and high prices."
The report also suggests that supply remains a limiting factor.
New listings declined 2.5% from the previous week to their lowest level since January, while active listings slipped 0.7% week over week. Months of supply fell to 3.4, remaining below the four to five months generally considered a balanced market.
Home prices also continued to hold near record highs. The national median sale price increased 2.2% year over year to $408,808 — about $500 below the all-time high — while the median asking price rose 2.5% to $401,029.
Nationally, homes spent a median of 40 days on the market, one day longer than a year ago. Nearly one in five listings (19.4%) recorded a price reduction, while 28.4% of homes sold above list price. The average sale-to-list price ratio held steady at 99.1%.
Among major metros, Austin posted the largest annual increase in pending sales at 17%, followed by West Palm Beach, Fla. (16.6%), Boston (13.4%), Providence, R.I. (12.8%), and Sacramento, Calif. (12.7%). Houston recorded the steepest decline, with pending sales falling 12.2% year over year.
