Homebuyer Demand Reaches Highest Level Since May 2022, But Availability Remains Tight

Redfin is reporting that house hunters are returning to the market as mortgage rates and prices continue to decline. Mortgage-purchase applications increased for the fourth consecutive week in the week ending March 26th, and Redfin’s Homebuyer Demand Index is at its highest level since May 2022.

However, Redfin notes the uptick in early-stage demand has yet to translate into more home sales. Nationally, pending sales are down 19% year-over-year in the four-week period ending March 26th—the biggest decline in about two months.

Redfin believes that the demand for homes has not yet rendered an improvement in sales specifically because would-be buyers are limited by lack of supply. The report points to the fact that new listings of homes for sale have declined 22%, one of the biggest drops since the start of the pandemic. Redfin says homeowners are reluctant to sell because they don’t want to give up a low mortgage rate. The lack of new listings is causing a growing share of the homes that are listed to sell quickly. Nearly half of listed homes are selling within two weeks—the largest share since June 2022.

Finally, Redfin says that while the lack of new listings is holding back sales nearly everywhere in the US, prices are dropping fast in some parts of the country but are increasing in others. Home prices have dropped in 28 out of the 50 most populous US metro areas.