Lower Rates Drive Application Growth, Even As Homes Take Longer to Sell

The housing market is slowing its skid, largely as a result of falling mortgage rates, the latest report from Redfin shows.

New listings and pending sales are still heading south, but the declines in the four-week period ending January 18 were their smallest in more than a month. At the same time, mortgage applications rose to their highest level in more than three years.

Pending sales fell 2.9% while listings dipped 1.6%. Applications for financing rose 5%, week-over-week.

The reason: The weekly average mortgage rate dropped to a three-year low of 6.06%, bringing the median monthly house payment down to $2,441. That’s a 6.3% decline from this time last year. (Since then, the daily average loan rate has increased from a 3-year low of about 6% in early January to 6.2% this week.)

However, houses that are changing owners are taking a long time to sell. The typical home that sold spent 61 days on the market before going under contract, a week longer than last year. Buyers are taking their time because sellers now outnumber them by a record margin, giving them plenty to choose from and few buyers to compete against.

“Buyers have much more power than they’ve had over the past few years,” commented Ben Ambroch, a Redfin agent in Milwaukee. “Buyers are negotiating prices and asking for repairs based on inspections. Sellers are more willing to compromise because listings have been sitting on the market longer; the sellers who need to move are eager to get a deal done.”

Other key economic data in Redfin’s report:

• The average sale-to-list price ratio was 97.8%.
• The share of listings sold above list price was 19.7%.
• The median asking price was $388,325; the median sales price, $378,493.
• Google searches for “homes for sale” rose about 10%, the highest level in four months.