Pending Home Sales Drop to Lowest Level since at least 2015, Prices Fell 2.4% in Metro Phoenix

Pending U.S. home sales dropped 32% year over year to their lowest level since at least 2015 during the four weeks ending January 1, according to a new report from Redfin, the technology-powered real estate brokerage.

The biggest declines were in pandemic homebuying hotspots Las Vegas, Phoenix and Austin, which each saw pending sales plummet more than 50%. The housing market fizzled out at the end of 2022 due to 6%-plus mortgage rates, a looming recession, record-low new listings, extreme winter weather and the typical holiday slowdown.

Signals of early-stage demand are mixed. Redfin’s seasonally adjusted Homebuyer Demand Index–a measure of tour requests and other buying services from Redfin agents–was up 8% from two weeks earlier. Mortgage-purchase applications fell about 12%, though the double-digit drop was partly due to severe late-December storms hitting nearly every part of the U.S.

“Two categories of buyers are starting their search right now: First-timers hoping prices and competition are more manageable than they have been over the last few years, and returning buyers who took a break after losing out on multiple homes during the pandemic bidding-war frenzy,” said Seattle Redfin agent Shoshana Godwin. “They should be able to take their time and find a home for a slightly lower price than last year, but the market will likely become more competitive over the next few months. I expect new listings to remain scarce as homeowners hold onto low interest rates while the pool of determined buyers circle the few homes that are available.”

Home prices fell from a year earlier in 19 of the 50 most populous U.S. metros

The typical U.S. home sold for $350,000 during the four weeks ending January 1. That’s up just 0.5% from a year earlier, slightly slower than the 0.7% growth we saw at the beginning of the pandemic, when the market nearly ground to a halt. Prices were down 10% from the June peak. On a metro level, home-sale prices fell year over year in 19 of the 50 most populous U.S. metros during the four weeks ending January 1. By comparison, just 10 metros saw price declines a month earlier.

Prices fell 10.4% year over year in San Francisco, 6% in Sacramento, 5.6% in San Jose, CA, 5.4% in Los Angeles, 4.6% in Detroit, 4.4% in Oakland, CA, 4.2% in Seattle, 3.9% in Pittsburgh, 2.9% in Austin, 2.8% in New York, 2.4% in Phoenix and 2.2% in Boston. They fell 2% or less in Anaheim, CA, Chicago, Riverside, CA, Washington, D.C., San Diego, Portland, OR and Newark, NJ.

This marks the biggest year-over-year drop for San Francisco prices since at least 2015.

Leading indicators of homebuying activity:

  • For the week ending January 5, 30-year mortgage rates ticked up to 6.48%. The daily average was 6.41% on January 5.
  • Mortgage purchase applications during the week ending December 30 were down roughly 12% from two weeks earlier, seasonally adjusted. Purchase applications were down 42% from a year earlier.
  • The seasonally adjusted Redfin Homebuyer Demand Index was up 6% from a week earlier and up 10% from a month earlier during the four weeks ending January 1. It was down 20% from a year earlier.
  • Google searches for “homes for sale” started to rise from the low reached in November during the week ending December 31, but they were down about 33% from a year earlier.
  • Touring activity as of December 29 was down 63% from the start of the year, compared to a 54% decrease at the same time last year, according to home tour technology company ShowingTime. The significant declines are likely due to the holidays.

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, this data covers the four-week period ending January 1. Redfin’s weekly housing market data goes back through 2015.

  • The median home sale price was $350,000, up just 0.5% year over year, the slowest price growth on record and the third consecutive four-week period of price growth under 1%.
  • The median asking price of newly listed homes was $346,535, up 3.1% year over year.
  • The monthly mortgage payment on the median-asking-price home was $2,254 at the current 6.48% mortgage rate. That’s down slightly from a week earlier and down $253 from the October peak. Monthly mortgage payments are up 36.2% from a year ago.
  • Pending home sales were down 31.7% year over year, the 11th straight four-week period of pending sales declining more than 30%.
  • Among the 50 most populous U.S. metros, pending sales fell the most from a year earlier in Las Vegas (-61.9%), Phoenix (-56.7%), Austin (-54%), Jacksonville, FL (-53.8%) and Nashville, TN (-51.5%).
  • New listings of homes for sale were down 22.4% from a year earlier, dropping to their lowest level on record.
  • Active listings (the number of homes listed for sale at any point during the period) were up 18.6% from a year earlier, the biggest annual increase since at least 2015.
  • Months of supply—a measure of the balance between supply and demand, calculated by dividing the number of active listings by closed sales—was 3.4 months, up slightly from a week earlier and up from 1.8 months a year earlier.
  • 28% of homes that went under contract had an accepted offer within the first two weeks on the market, down from 35% a year earlier and the lowest share since January 2020.
  • Homes that sold were on the market for a median of 42 days, up nearly two weeks from 30 days a year earlier and up from the record low of 18 days set in May.
  • 22% of homes sold above their final list price, down from 40% a year earlier and the lowest level since March 2020.
  • On average, 3.8% of homes for sale each week had a price drop, down sharply from 4.7% a week earlier and 5.7% a month earlier.
  • The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, fell to 98% from 100.1% a year earlier. That’s the lowest level since March 2020.

To view the full report, including charts, here.

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