Pending home sales in the United States have seen a decline after the daily average mortgage rates jumped to their highest level for interest rates since December 2023.
After a slight reprieve in December, pending home sales slid by 8% in January as the median U.S. sale price rose 5.4% year-over-year and the average monthly mortgage payment jumped to just about $100 shy of October's all-time high. January's decline in pending home sales is the biggest recorded in four months, according to data from Redfin.
Apart from rising mortgage rates, other factors, such as the winter weather, affected home buying deals across the country.
In addition to declining pending home sales, mortgage applications also fell 2.3% in the week ending Feb. 9 compared to a week earlier, per a report from the Mortgage Bankers Association (MBA). The report also noted that the refinance share of mortgage activity decreased to 34.2% of total applications from 35.4% posted the previous week.
Joel Kan, MBA's Vice President and Deputy Chief Economist, blamed the decline on the rising 30-year fixed mortgage rate, which was up to 6.87%-the highest recorded since December 2023.
"Purchase applications remained subdued as elevated rates continue to add to affordability challenges along with still-low existing housing inventory. Refinance applications declined and remained depressed, with rates still higher than a year ago," Kan added.
Improvements in the Housing Market
Despite posting a decline in pending sales and mortgage applications, Redfin noted that requests for home tours and other buying services have steadily risen since mid-January. Home tours have increased 16% since the start of the year, compared with 10% reported during the same period in 2023. New home listings also increased 7% year-over-year.
"We're seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn't up as much as we would expect at this time of year," Chen Zhao, Redfin's economic research lead, said. "That's because mortgage rates are climbing again and winter weather has been harsher than usual in much of the country, keeping some house hunters at home."
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