Nearly a third of pending home sales fell through in October — the most on record — as canceled deals and price cuts hit record highs, according to a report from Redfin.
The technology-powered real estate brokerage said Monday that pending home sales dropped 32.1% year over year last month, the largest decline since Redfin began keeping records in 2013.
Nearly 60,000 home-purchase agreements fell through in October, equal to a record 17.9% of homes that went under contract, Redfin said. In addition, prices dropped on almost one-quarter (23.9%) of homes for sale, double the rate from a year earlier.
Surging mortgage rates also caused would-be sellers to stay put due to the “lock-in” effect. The average 30-year-fixed mortgage was 6.9% in October, up 3.83 percentage points from 3.07% a year earlier — the largest year-over-year increase during any month since 1981, Redfin said. That contributed to a 24% year-over-year drop in new listings, the steepest decline since April 2020, when the onset of the pandemic brought the housing market to a near halt.
“The Fed’s actions to curb inflation are causing the housing market to slow at a pace not seen since the financial crisis,” said Redfin Economics Research Lead Chen Zhao. “There are already early but promising signs that inflation is cooling, which caused mortgage rates to drop last week. If that progress continues, buyers who recently backed out of deals may return to the market and sellers may be less inclined to slash their prices.”
Sale prices still have room to fall. The median U.S. home sale price declined 1.4% month over month — the largest slowdown during any October since 2012 — but was up 4.9% from a year earlier.
Prices may ease as listings linger on the market and competition slows, Redfin said. Homes that sold in October were on the market for a median of 35 days, up from 21 days a year earlier, and less than half (44.6%) of home offers written by Redfin agents faced competition. That compares with more than two-thirds (67.3%) in October 2021.
Other Highlights:
- Prices fell on a year-over-year basis in five metro areas: San Francisco (-4.5%); Lake County, Ill. (-3.5%); San Jose, Calif. (-1.6%); Oakland, Calif. (-1.6%); and Stockton, Calif. (-0.2%).
- Prices increased most in North Port, Fla. (25.9%); El Paso, Texas (18.2%); Miami (17.4%); Tampa, Fla. (17.2%); and Cape Coral, Fla. (16.1%).
- Pending home sales fell the most in Allentown, Pa., declining 54.9% year over year. Next were Greensboro, N.C. (-50.4%); Honolulu (-47.3%); Salt Lake City (-46%); and Jacksonville, Fla. (-45.9%).
- Pending sales fell the least in McAllen, Texas (-6.6%); Rochester, N.Y. (-14.2%); Detroit (-14.4%); Buffalo, N.Y. (-15.1%); and El Paso, Texas (-15.8%).
- In Jacksonville, Fla., 706 home-purchase agreements fell through, equal to 30.6% of homes that went under contract that month — the highest percentage among the metros Redfin analyzed. It was followed by Tampa (26.7%); San Antonio (26.6%); Atlanta (25.2%); and Las Vegas (25.1%).
- San Francisco had the lowest percentage of cancellations (6%), followed by San Jose (8%); Nassau County, N.Y. (8.2%)’ Montgomery County, Pa. (9.3%); and New York (10.5%).
- New listings fell the most in Cape Coral, Fla. (-50.8%)’ followed by Boise, Idaho (-49.8%); Greensboro, N.C. (-46.3%); Allentown, Pa. (-42.1%); and Baton Rouge, La. (-39.3%).
- New listings only rose in one market — El Paso, Texas — increasing 3.3%. They fell the least in McAllen, Texas (-0.4%); New Orleans (-3.2%); Detroit (-6.3%); and Rochester (-7.8%).
