Steadily-decreasing mortgage rates boosted home sales and new listings this September.
Pending U.S. home sales were flat year-over-year for the four weeks ending September 29, the first non-decline since January, according to Redfin. This compares to last year's slump when mortgage rates spiked to the mid-7% range.
Pending sales increased year over year in 27 of the 50 most populous U.S. metros, the most since January. They rose most in Phoenix, with a 13% increase, followed by San Jose, Calif. (12%) and Portland, Ore. (10%).
Redfin reported home buying demand is starting to improve after dropping to a low point last year, but pending sales are still below pre-pandemic levels. Florida, for one, is still seeing big declines in sales as homebuyers have backed away, largely due to climate disasters, along with rising insurance and HOA costs. Pending sales fell 18% YOY in West Palm Beach — more than anywhere else in the country — followed by 16% YOY decreases in Fort Lauderdale and Miami.
Homebuyer demand at earlier parts of the buying process is improving, too. Redfin’s Homebuyer Demand Index is up 9% month over month, reaching its highest level since April. By September 30, home buyers had locked in more than twice as many mortgages as they did a month earlier, according to Optimal Blue data, and mortgage-purchase applications rose 10% month over month.
The average 30-year mortgage rate fell to 6.08% last week, a two-year low, lowering the typical homebuyer’s payment to $2,529. This 5.9% decline marks the largest YOY drop since May 2020.
Realtor.com's September 2024 report identified a correlation between monthly mortgage payments for any given market's median-priced home and that market's annual growth in newly listed homes. Buyers in markets with the largest increases in new listings would save $504 (Seattle), $392 (Washington, DC), and $935 (San Jose) on their monthly mortgage payment, compared with just $212 (New Orleans), $221 (San Antonio), and $271 (Tampa) in the three markets with the smallest increase in new listings.
Declining mortgage rates are also encouraging some homeowners to sell, though that’s not a new trend, analysts with Redfin observed. Listings have been on the rise for nearly a year, and this week’s 4.3% increase is on par with those over the last few months.
Realtor.com, on the other hand, reported an 11.6% increase in new listings this September over last year, reaching a three-year high on the heels of falling mortgage rates and the Fed’s 50-bps rate cut.
All four regions of the U.S. continued to see active inventory grow this September from last year. The South saw listings grow by 42%, while inventory grew by 36.5% in the West, 22.3% in the Midwest, and 14.8% in the Northeast. The inventory of homes for sale increased in all of the largest 50 metros compared with last year. Metros that saw the most inventory growth included San Diego (+77.2%), Tampa (+74.0%), and Orlando (+68.6%).
Still, analysts pointed out, September 2024 was "the slowest September in five years," as homes spent an average of 55 days on the market — two more days than August 2024 and a week longer than last September.
