Though rates have stabilized in 2024, prices and stock shortages have kept home sales at bay, with pending sales down 8%.
This is the biggest decline in four months, according to a new report from Redfin.
Mortgage rates have stayed in the mid-6% range for several weeks, but Redfin noted that daily average rates saw their biggest one-day jump in more than a year on February 2, contributing to the dour data. Rates hit 6.8% last week, an increase.
January’s hotter-than-anticipated jobs report and signals from the Central Bank that it’s in no rush to cut rates have soured consumers’ moods on homebuying.
“We want to see more evidence that inflation is moving sustainably down to 2%. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates,” Fed Chairman Jerome Powell said in an interview on CBS’ “60 Minutes.”
Stocks fell in response, and Treasury yields rose. Mortgage rates tend to follow Treasury yields.
Adding insult to injury, home prices keep climbing and have pushed the dream of homeownership out of reach for many Americans. The typical monthly mortgage payment is just $100 less now than its all-time high in October despite lower rates.
Unusually tough winter weather may also have delayed buyers’ timelines. The company’s data on touring and other buying services is on the rise, in part due to milder temperatures. Sellers are responding, with new listings up 7% YOY.
“We’re seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn’t up as much as we would expect at this time of year,” said Chen Zhao, Redfin’s economic research lead.
“That’s because mortgage rates are climbing again and winter weather has been harsher than usual in much of the country, keeping some house hunters at home.”
Activity across the board is expected to increase as the year progresses, though, and consumers are starting to see the bigger picture. In Fannie Mae’s latest Home Purchase Sentiment Index, a survey-high number of consumers said they believe mortgage rates will decline in the next twelve months.
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