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Indicators of homebuyer demand showed signs of falling last week as mortgage rates hit a 15-year high, according to a new report by the online brokerage Redfin.
The report released Thursday notes that home tour requests to Redfin agents fell 7 percent and mortgage applications declined 13 percent. The Redfin homebuyer demand index, the brokerage’s in-house measure of buyer demand, declined 6 percent to its lowest level since June when mortgage rates first neared 6 percent.
With rates now higher than 6 percent, homebuyers have lost 29 percent of their purchasing power since the beginning of 2021 when rates sat below 3 percent, according to Redfin. With Redfin currently pegging rates at 6.66 percent, the montly mortgage payment on the median asking price home is at a record $2,528, up 49 percent from a year ago when it was just $1,701.
“Mortgage rates well over 6% are spooking homebuyers,” said Redfin Deputy Chief Economist Taylor Marr. “Sellers are pulling back in this market, but buyers are pulling back even more. Home prices are holding steady for now.”
The report shares that searches for “homes for sale” were down 33 percent from a year earlier during the week ending Oct. 1, and touring activity was down 26 percent from a year earlier during the same period, according to data from the home tour engine ShowingTime.
After falling 13 percent week over week for the week ending Sept. 30, mortgage purchase applications sat at their lowest level since October 2015 and were down 37 percent from the same time last year.
Housing prices are yet to fall significantly though, with the median home sale price increasing 7 percent annually to $367,652 and the median asking price of newly listed homes increasing 9 percent year over year to $383,000.
“It will take a few months before the prices of closed sales start to reflect this shock to the market,” Marr said. “However, there is evidence of sizable price declines in parts of the market that aren’t accounted for by MLS data, such as home builders offloading homes in bulk at a 20% discount.”