Home tours rise, but sales lag as mortgage rates hit seven-month high

High mortgage rates limit sales

The rise in interest coincides with a seven-month high in daily average 30-year fixed mortgage rates, which reached 7.17% on January 8. These elevated rates have not deterred all buyers; some are adjusting to the reality of sustained high rates while others are motivated by the new year or increased inventory.

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However, the higher rates have hindered sales. Pending home sales fell 3.1% in the four weeks ending January 5 compared to the same period last year. Redfin noted that the year-over-year decline may appear larger because it is being compared to a period of unusually high demand in early 2024, spurred by a significant drop in mortgage rates.

Sellers hold back

On the supply side, new listings dropped 2.5% year-over-year, the steepest decline in over a year. Active listings, however, rose 10.6%, reflecting an accumulation of unsold homes. Despite this, the median sale price increased 5.5% to $379,988, while the median asking price climbed 4.5% to $374,975.

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“Some buyers are getting serious about their search because they’ve come to terms with 7% rates and they’re worried that if they wait longer, home prices will just keep rising,” Lam said. “Others are starting their search in hopes that rates will decline soon. Either way, I’m advising buyers to get serious now because desirable listings will get more competitive as the year goes on.”

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