Pending Home Sales Jumped 2.5% in September, the Biggest Monthly Increase in Over a Year and a Half
Redfin reports that existing home sales, which are a lagging indicator, fell to a seasonally adjusted annual rate of 4,023,067. That’s the lowest level on record aside from the start of the pandemic. Pending home sales jumped 2.5% month over month in September on a seasonally adjusted basis, the largest increase since January 2023, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. They rose 3.1% year over year, the biggest annual increase since May 2021. Pending sales climbed last month for two reasons: Still, buyers are getting better rates than they were a year ago, when mortgage rates were above 7%. The weekly average interest rate on a 30-year mortgage now sits at 6.44% after hitting a two-year low of 6.08% in late September. The Fed is expected to cut interest rates by another 25 basis points at their November 7 meeting, which shouldn’t have a big impact on mortgage rates. But that could change if the November 1 jobs report has any surprises. “September showed that there are buyers and sellers who are ready to jump into the market—when the conditions are right,” said Redfin Senior Economist Elijah de la Campa. “Most buyers who went under contract last month did so when mortgage rates were falling and before two major hurricanes devastated much of the South. We’re closely watching October data to see whether the recent increase in rates and widespread devastation from the storms causes the market to slow back down.” De la Campa continued: “My advice for buyers is don’t try to time the market. There are a lot of swing factors, like the upcoming jobs report and the presidential election, that could cause the housing market to take unexpected twists and turns. If you find a house you love and can afford to buy it, now’s not a bad time. Mortgage rates are still down from their peak, and buyers in some areas are able to negotiate because homes have been sitting on the market.” Closed sales of existing homes, many of which were negotiated before the latest drop in mortgage rates, dropped to the lowest level on record aside from the start of the pandemic. They fell 0.5% month over month and 3% year over year in September—to a seasonally adjusted annual rate of 4,023,067. Overall closed home sales (including existing and new homes) fell 0.2% month over month on a seasonally adjusted basis and declined 1.6% year over year—to the lowest level since December. Home Sales Plummet Across Florida In West Palm Beach, FL, closed home sales dropped 23% year over year in September—the biggest decline among the 50 most populous U.S. metropolitan areas. Next came three other Florida metros: Tampa (-21.9%), Miami (-19.8%) and Fort Lauderdale (-18.7%). Please note that metro-level data is not seasonally adjusted. Hurricane Helene made landfall in the Big Bend area of the Florida Gulf Coast on September 26, and went on to devastate Appalachia, becoming the deadliest storm to hit mainland America since Hurricane Katrina. Then, less than two weeks later, Hurricane Milton made landfall in Florida. That may have an impact on October home sales. “We have listings that were flooded and taken off the market, and sellers who were getting ready to list but can’t because they need to repair damage,” said MaryDell Penney, Redfin’s market manager in Orlando, FL. “Closings are being delayed because most lenders require post-storm reinspections, and insurers stop writing new policies when there’s a named storm in the region.” Penney continued: “Contracts all have a force majeure section outlining what happens if services are shut down because of a natural disaster, etc. They also specify the risk of loss and seller’s obligation to repair damage if the cost of restoration doesn’t exceed 1.5% of the purchase price. If damage exceeds that, then the buyer can either take the property as-is along with 1.5% from the seller, or the buyer can walk away.” A recent Redfin survey found that two in five Florida residents have set aside money for home repairs related to unpredictable events caused by climate change. Florida’s housing market had already been cooling prior to hurricane season amid rising inventory, surging HOA fees and a housing insurance crisis. In the metro-level highlights section below, you’ll notice that Florida is home to many of the metros that are showing signs of slowing, from sales to prices. Home Prices Continue to Climb Amid Shortage of Homes for Sale The median home sale price in September was $428,212, up 3.9% from a year earlier. Prices are rising because even though listings have inched up in recent months, there’s still a shortage of homes for sale. New listings rose 0.8% month over month on a seasonally adjusted basis in September but were down 0.7% from a year earlier, and were 17.7% below pre-pandemic (September 2019) levels. Active listings rose 0.2% month over month and climbed 14.9% year over year, but were 23.1% below pre-pandemic levels. Homes Are Taking Longer to Sell Than a Year Ago, And Fewer Are Going for Above the Asking Price One reason active listings have been piling up is that many homes have been sitting on the market. That’s bad news for sellers, but it’s good news for buyers because it means they may have room to negotiate. Redfin agents recommend that sellers price their homes fairly from the get-go so they can sell quickly and don’t have to drop their price later on. The typical home that sold in September was on the market for 39 days, up from 33 a year earlier. A little over one-third (36.5%) of homes that sold went under contract within two weeks, down from 42.3% in September 2023. And less than one-third (28.4%) of homes that sold last month went for more than their asking price, compared with roughly one-third (33.2%) a year earlier. Metro-Level Highlights: September 2024 The bullets below are based on a list of the 50 most populous U.S. metropolitan areas. Some metros may be removed from time to time to ensure data
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