Lower Mortgage Rates Rejuvenate Buyer Interest, and Home Sale Prices Are on the Rise

Redfin reported on Thursday (1-19-23) that in the four weeks ending January 15th, the median US home-sale price increased 0.9% from a year earlier to $350,250. This is the biggest increase in a month.

Redfin says prices remain elevated because buyer activity has started to pick up as mortgage rates decline due to slowing inflation. In the week ending January 19th, mortgage rates had dropped to 6.15%, their lowest level since September 2022. At the same time, mortgage purchase applications increased 25% from the week ending January 13th, a jump, Redfin says, that is likely to lead to more pending homes sales in the coming months.

Adding additional background to the report, Redfin’s Deputy Chief Economist Taylor Marr said:

“The people who started browsing homes online and scheduling house tours at the end of 2022 are now turning into actual homebuyers. Low competition, falling mortgage rates and seller concessions are bringing some buyers back to the market. That’s helping keep national home prices afloat, which is one bright spot for sellers. But many buyers are still sitting on the sidelines and demand could dip back down if inflation declines slower than expected or mortgage rates rise again.”