While the new year has brought a slight increase in home tours, elevated mortgage rates continue to impact the pace of home sales, according to a report from Redfin.
Growth in Homebuyer Interest
Redfin’s Homebuyer Demand Index, which tracks home tours and other activities conducted by Redfin agents, showed a 2% increase compared to the previous month and the same period last year for the week ending January 5. This suggests a modest rise in buyer interest.
“Three out of four offers my clients made last week faced competition, with some buyers offering favorable terms like waiving contingencies or releasing earnest money early,” said Emily Lam, a Redfin Premier agent in Seattle. “Some properties are receiving multiple offers shortly after being listed.”
Impact of Higher Mortgage Rates
The increase in buyer activity coincides with a rise in daily average 30-year fixed mortgage rates, which reached 7.17% on January 8—the highest level in seven months. While some buyers are adapting to these elevated rates, others are motivated by increased inventory or new year goals.
Despite this, higher borrowing costs have slowed sales. Pending home sales declined by 3.1% in the four weeks ending January 5 compared to the same period last year. Redfin pointed out that this decline appears more significant when compared to the unusually high demand in early 2024, which followed a drop in mortgage rates.
Shifts in Housing Supply
On the supply side, new listings fell 2.5% year-over-year, marking the largest decline in over a year. However, active listings increased by 10.6%, indicating a growing inventory of unsold homes. Despite these shifts, the median sale price rose 5.5% to $379,988, and the median asking price increased 4.5% to $374,975.
“Some buyers are moving forward with their searches, accepting that 7% mortgage rates may persist,” Lam noted. “Others are hoping rates will decrease soon. I’m advising clients to act now, as competition for desirable properties is likely to intensify later in the year.”
Conclusion
The housing market is experiencing a mixed dynamic as rising mortgage rates balance increased buyer activity with slower sales. Buyers and sellers alike are adjusting to these conditions as they navigate an evolving market.
