Amid declining mortgage rates, the U.S. housing market saw a surge in activity with housing prices reaching their highest point since October of last year.
A report issued by Redfin late last week indicated a reinvigoration of buyer and seller participation in the housing market, marked by a steep increase in pending home sales and housing prices for November, coinciding with the drop in mortgage rates, which currently stand at 6.64 percent, according to Mortgage News Daily.
The median U.S. home sale price rose to $408,732 in November, according to Redfin, marking a 3.7 percent increase from the previous year and the most substantial growth since late last year.
Pending home sales rose 2 percent month over month, hitting the highest level in a year on a seasonally adjusted basis, the real estate brokerage company said in its report.
Shay Stein, a Redfin Premier real estate agent in Las Vegas, said in the report that housing market participants on the buy side and sell side are beginning to learn to “live with” the uncertainty of a volatile housing market, adding that they’ve come to the realization that “no one has a crystal ball that can predict exactly when mortgage rates will fall back to 5 [percent].”
Stein said another reason the housing market saw increased activity last month is that buyers and sellers are now living in the same reality.
“A year ago, sellers had trouble understanding why they weren’t getting $20,000 over the list price like their neighbor did during the pandemic homebuying boom,” Stein said in the report. “Now, they understand that to sell their home, they need to price it fairly and in some cases offer the buyer concessions like money toward closing costs or mortgage-rate buydowns.”
A noteworthy aspect from the Redfin report is the trend in new listings, which saw a modest rise of 1.3 percent month-over-month, hitting a peak not seen since October of last year.
The uptick, though slight, marks the first year-over-year increase in new listings in more than 18 months, suggesting a gradual return of sellers to the market. However, despite the increase, overall active listings were down 7.9 percent from the previous year, indicating a continuing challenge in inventory levels.
Despite the increase in activity, Redfin said the housing market isn’t out of the woods just yet. About 16.9 percent of home-purchase agreements were canceled in November—the highest rate since 2017—which Stein said indicates a level of uncertainty and apprehension among buyers, exacerbated by economic concerns and the strain on housing affordability.
The trend of uncertainty and apprehension could be regional. Redfin found a rise in pending home sales in cities like Anaheim, California, and San Antonio, Texas, while areas like Greensboro, North Carolina, and Birmingham, Alabama, saw declines.
While the data from Redfin indicates a notable uptick in housing activity, the real estate brokerage said regional disparities, the high rate of deal cancellations, and “economic woes” are keeping many people out of the market.
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