Record low mortgage rates have fueled home sales to pass pre-pandemic levels during the first week of July, according to a market survey released Wednesday by Redfin. It’s the first time since the country went into regional lockdowns in March that sales have topped January and February levels.
The spike in sales comes as the fixed-rate for a 30-year mortgage averaged 3.03 percent for the week ending July 9.
“The industry is responding to an avalanche of applications for refinances and purchases,” Rob Foos, a mortgage advisor with Redfin Mortgage in Boston, said in a statement. “A combination of rock-bottom rates plus pent-up purchase demand has resulted in the highest levels of purchase applications in about a decade.”
A number of indicators signal that home sales are going to continue their rise in coming weeks, according to the report. Mortgage purchase applications were 15 percent above pre-pandemic levels and the Redfin home-buying demand index is roughly 20 percent above pre-pandemic levels.
New listings were roughly at their pre-pandemic level for the third straight week, according to the report, but could still not satisfy the hearty homebuying demand. The total number of new homes for sale ended the week down 29 percent year over year.
“Some of my clients are considering selling, but it’s a matter of finding a home they can buy,” Thomas Wiederstein, a Redfin agent in Phoenix, said in a statement.
“Even if they do find a home that checks all the boxes, many move-up buyers can’t buy a new home before they sell their current one,” Wiederstein added. “With bidding wars so common, it’s very hard to get an offer accepted that’s contingent on the sale of the buyer’s current home.”
The lack of inventory, coupled with low mortgage rates, is leading to more competition for homes and in turn, rising home prices. The average sales price for the week ending July 5 was $310,000 — an increase of 7 percent year-over-year.
The share of homes that went off the market within two weeks was 45 percent for the week, leading to more bidding wars and buyers waiving contingencies to make offers more attractive.
“We’re back to buyers waiving their rights to cancel the contract if something pops up during the inspection or they can’t get their loan approved,” Shoshana Godwin, a Redfin agent in Seattle said in a statement. “Buyers used to try to inspect the home before writing an offer, but now sellers are providing an inspection report upfront. That brings in even more bidders because they don’t need to spend $500 on an inspection just to make an offer.”