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Rising mortgage rates thwarted the first weeks of the spring market, according to a Redfin housing report published on Thursday.
Homesellers pulled back during the four weeks ending March 31, leading new listing growth to experience the smallest annual increase in seven weeks (+8.4 percent). The slowdown in new listings inevitably led to slower buyer activity. Home tour requests on Redfin only grew 15 percent year-over-year, a marked slowdown from the year prior, where tour activity had grown 21 percent.
Chen Zhao | Credit: Redfin
Redfin Economic Research Lead Chen Zhao called consumers’ late-March retreat a “blip” caused by the convergence of several religious holidays, including Easter. However, Zhao didn’t ignore the impact of rising mortgage rates and strong home price growth on buyer and seller activity.
The U.S. median home sale price grew 4.7 percent year over year to $376,223, and the weekly average 30-year fixed mortgage rate increased 7.43 percent year over year to 6.79 percent. The boost in median prices and average rates boosted median mortgage payments to $2,700 per month —$13 shy of the all-time high in October 2023.
Headwinds yielded mixed results in the nation’s 50 largest metropolitan statistical areas.
Median sales prices increased in all metros except San Antonio (-0.3 percent), and 74 percent of markets the 50 largest markets experienced a bump in pending sales, with San Jose (+30.5 percent) and San Francisco (+24.9 percent) leading the way. However, new listings declined in 74 percent of markets, with Atlanta (-9.6 percent) and Newark (-8.9 percent) taking the biggest hit.
Still, Zhao is hopeful about the coming months as inflation continues to head in the right direction.
“Daily average mortgage rates rose this week because of some disappointing economic news,” she said. “But if the upcoming job and inflation reports show that the economy is heading in the right direction, the Fed is likely to confirm they will cut interest rates in June, which would lower mortgage rates.”
“Home-price growth could soften as spring goes on if new listings regain the momentum we saw before Easter,” she added.
