Residential Market Reaches Inflection Point Amid Rising Inventory and Pending Sales Turnaround
While it has only been two weeks since the Federal Reserve decided to begin lowering interest rates, the cut is already proving to be a boon for some residential markets across the country. According to a new report from Redfin, the move, leading to a fall in mortgage rates, is boosting sales and may even be bringing lenders and buyers back to the market after nearly a year of deteriorating conditions.
Redfin found that September was the first month of the year in which pending sales did not decline, with over half of the 50 most populated metro areas in the country experiencing increases in sales.
"Falling rates are an incentive for homeowners to sell, too, because they know demand is coming back, and they feel less locked in by their relatively low rate," said Max Shadle, an agent with Redfin. "But many people still have an ultra-low mortgage rate from a few years ago, and they're not quite ready to let go."
The largest increases in pending sales occurred in Phoenix, San Jose, and Portland, Oregon, rising by 13%, 12%, and 10%, respectively year-over-year.
Redfin reported that new listings have been on the rise for almost a year, and the decline in 30-year mortgage rates to 6.08% in recent weeks marks the lowest levels in two years. The firm also found that median sale prices in Newark, Nassau County, New York, Providence, Cincinnati, and Montgomery County, Pennsylvania, have increased by more than 9.1% and up to 13.6% on a year-over-year basis. At the same time, the median sale prices for homes in Austin, Tampa, Fort Worth, Denver, Dallas, Oakland, and San Antonio have all declined between 5% and 0.1% over the same period.
While conditions for sellers and buyers have begun to improve in response to the decline in mortgage rates, Redfin also noted an increase in demand for tours and other services used by prospective buyers earlier in the homebuying process. However, with the seasonal slowdown in home sales typically arriving as colder months set in, there is an expectation that sales volumes will taper off in the coming months, regardless of current market conditions.
Source: GlobeSt/ALM