Pending Home Sales Post Record Drop in October as Deal Cancellations, Price Cuts Hit Record High
(NASDAQ: RDFN) - Pending home sales fell the most on record in October and deal cancellations and price cuts hit record highs, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.
Pending sales dropped 32.1% year over year last month, the largest decline since at least 2013, when Redfin's records begin. Nearly 60,000 home-purchase agreements fell through, equal to a record 17.9% of homes that went under contract. Meanwhile, almost one-quarter (23.9%) of homes for sale experienced a price drop, double the rate of 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% one year earlier-the largest year-over-year increase during any month since 1981. That contributed to a 24% year-over-year drop in new listings, the steepest decrease on record aside from 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."
Still, sale prices 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. 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.
Note: Data is subject to revision
To view the full report, including charts, additional metro-level data and methodology, please visit: https://www.redfin.com/news/housing-market-tracker-october-2022
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 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. Since launching in 2006, we've saved customers more than $1 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.
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