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Redfin Reports 2023 on Pace For Fewest Home Sales Since 2008 As Mortgage Rates Hit 8%

October 19, 2023 8:00 AM

Redfin economists say this is likely to be the slowest sales year since the Great Recession as persistently high mortgage rates and low inventory spook buyers

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — This year is likely to end with roughly 4.1 million existing home sales nationwide, the fewest since the housing bubble burst in 2008 after the subprime mortgage crisis. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

What Redfin economists say: “Buyers have been in a bind all year,” said Chen Zhao, Redfin’s economic research lead. “High mortgage rates and still-high prices are making it harder than ever to afford a home, shutting many young people out of homeownership and causing homeowners to reevaluate whether 2023 is the right time to move. Mortgage rates are staying high longer than anticipated, keeping away everyone except those who need to move and pushing our sales projection for the year down to a 15-year low. The last time home sales were this low was during the Great Recession. At that time, tough economic conditions and slow demand pushed home prices down 30% year over year in some parts of the country, creating an opportunity for first-timers to snatch up starter homes—but this time, there’s no deal to be had.”

What the numbers say: The average daily mortgage rate hit 8% this week, its highest level in 23 years. Rising rates have pushed buyers to the sidelines, with mortgage applications dropping to their lowest level since 1995 and Redfin’s Homebuyer Demand Index—a measure of tours and other early-stage demand indicators—at its lowest level in a year. Pending U.S. home sales fell 8% year over year during the four weeks ending October 15; that’s the smallest decline in a year and a half, but that’s mostly because sales plummeted at this time in 2022. Low inventory is another factor dampening sales: There are 14% fewer homes for sale than a year ago as homeowners stay put to hold onto relatively low rates. But new listings have ticked up slightly this fall, giving buyers a small reprieve.

What real estate agents say: Redfin agents recommend that buyers who are frustrated by low inventory and high housing costs consider new construction. Sales of newly built homes are holding up better than existing-home sales, largely because builders—unlike regular homeowners—aren’t locked in by low rates, and they’re often more motivated than homeowners to close a deal. Sales of U.S. new-construction homes increased 1.5% year over year in September as prices dropped about 4%, according to Redfin’s data.

Leading indicators

Indicators of homebuying demand and activity

Value (if applicable)

Recent change

Year-over-year change

Source

Daily average 30-year fixed mortgage rate

8% (Oct. 18)

Highest level in 23 years

Up from 7.1%

Mortgage News Daily

Weekly average 30-year fixed mortgage rate

7.57% (week ending Oct. 12)

Highest level in 23 years

Up from 6.9%

Freddie Mac

Mortgage-purchase applications (seasonally adjusted)

Down 6% from a week earlier (as of week ending Oct. 13)

Down 21%

Mortgage Bankers Association

Redfin Homebuyer Demand Index (seasonally adjusted)

Down 6% from a month earlier (as of the week ending Oct. 15) to its lowest level in nearly a year

Down 6%

Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents

Google searches for “home for sale”

Down 23% from a month earlier (as of Oct. 14)

Down 22%

Google Trends

Key housing-market data

U.S. highlights: Four weeks ending October 15, 2023

Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.

Four weeks ending October 15, 2023

Year-over-year change

Notes

Median sale price

$369,250

2.5%

Prices are up partly because elevated mortgage rates were hampering prices during this time last year

Median asking price

$385,048

5%

Biggest increase in a year

Median monthly mortgage payment

$2,730 at a 7.57% mortgage rate

10%

Just $8 shy of the all-time high set two weeks earlier

Pending sales

72,183

-8.4%

Smallest decline since May 2022, partly because pending sales fell rapidly at this time in 2022

New listings

81,497

-1.9%

Smallest decline since July 2022

Active listings

829,629

-13.6%

Months of supply

3.4 months

+0.2 pts.

Highest level since February.

4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions.

Share of homes off market in two weeks

39.1%

Up from 36%

Median days on market

32

-3 days

Share of homes sold above list price

30.2%

Up from 29%

Share of homes with a price drop

6.7%

Unchanged

Average sale-to-list price ratio

99.2%

+0.3 pts.

Metro-level highlights: Four weeks ending October 15, 2023

Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.

Metros with biggest year-over-year increases

Metros with biggest year-over-year decreases

Notes

Median sale price

Anaheim, CA (17.4%)

West Palm Beach, FL (12.7%)

New Brunswick, NJ (11.4%)

San Jose, CA (10.6%)

Newark, NJ (10.6%)

Austin, TX (-4.1%)

San Antonio, TX (-2.9%)

Houston, TX (-2.3%)

New York, NY (-1.2%)

Jacksonville, FL (-1.1%)

Declined in 9 metros (in 4 of those metros, the decline was smaller that 1%)

Pending sales

Orlando, FL (9.7%)

West Palm Beach, FL (9.5%)

Las Vegas, NV (4%)

Jacksonville, FL (3.3%)

Milwaukee, WI (2.9%)

Portland, OR (-25.2%)

Sacramento, CA (-20.6%)

Houston, TX (-18.3%)

Virginia Beach, VA (-18%)

Newark, NJ (-17.7%)

Declined in all but 9 metros

New listings

Orlando, FL (19.9%)

Miami, FL (15.3%)

West Palm Beach, FL (13.4%)

Fort Lauderdale, FL (10.8%)

Jacksonville, FL (9.7%)

Atlanta (-27.3%)

Houston (-22.4%)

Nassau County, NY (-15.7%)

Portland, OR (-14.6%)

Columbus, OH (-14.4%)

Increased in 12 metros

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-2023-fewest-home-sales-since-2008

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email [email protected]. To view Redfin's press center, click here.

Contact Redfin

Redfin Journalist Services:

Kenneth Applewhaite, 206-588-6863

[email protected]

Source: Redfin

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