Higher Mortgage Rates and Tight Supply of Homes For Sale Increase Buyer Urgency

According to the latest report from Redfin, the technology-powered real estate brokerage firm, home prices moved unseasonably higher and quicker sales became more common in October. In the 4-week period ending October 31, the national median sale price increased 13% year-over-year to $357,007 and 1.5% from just 3-weeks earlier. This is compared to a 0.1% increase during the same time period in 2019.

New listings of homes for sale were down -7% from a year earlier, but up 8% from 2019. Active listings (the number of homes listed for sale at any point during the period) fell -22% from 2020 and were down -40% from 2019. Mortgage rates were down slightly in the latest week but have risen 30 basis points since August, and the share of homes sold in one week rose to 33%, up 2.2 percentage points since September 12. During the same period in 2019, the share of homes sold in a week fell -1.2 points.

In a statement prepared for the release of the report, Daryl Fairweather, Redfin’s Chief Economist said, “Rising mortgage rates have lit a fire under many homebuyers. Fear of missing out (FOMO) is always a powerful force in this supply-constrained housing market, but especially so today for buyers who weren’t able to snag a home last year before mortgage payments shot up by 15%. With this renewed FOMO, the housing market is heating up from the slight lull a few months ago.”