Pending Home Sales Post Biggest Increase Since 2021

Home sales are rising in most major U.S. metros as housing payments sit near their lowest level since January, but they’re falling in coastal Florida as hurricanes hit the southeastern U.S. Mortgage rates rebounded over the weekend; that could soon begin to impact homebuyer demand.

Pending U.S. home sales rose 2% from a year earlier during the four weeks ending October 6, the biggest increase in three years. Demand picked up at earlier stages of the homebuying process, too. Redfin’s Homebuyer Demand Index–a measure of tours and other buying services from Redfin agents–sat near its highest level since May last week, and mortgage-purchase applications are up 8% month over month. New listings are also rising, with a 5.7% year-over-year uptick. But unlike the increase in pending sales, that’s a continuation of a trend; new listings have been increasing for nearly a year. 

Pending sales improved because buyers came out of the woodwork in late September after the Fed’s interest-rate cut, even though mortgage rates had already been declining for several weeks in anticipation of the cut. Falling mortgage rates have pushed the typical homebuyer’s housing payment down to $2,526, near its lowest level since January and down 5.8% year over year. It’s worth noting that we’re comparing to a period last year when sales waned as mortgage rates surged to 7.5%.

Mortgage rates jumped over the weekend, which could deter some buyers in the coming weeks

The improvement in sales may slow in the coming weeks, as mortgage rates started rising last Friday after a surprisingly strong jobs report. Daily average mortgage rates jumped to 6.62% on Monday from  6.26% last Thursday. We expect some buyers may back off due to rising rates, but not all of them: Mortgage rates are still significantly lower than they were a year ago–and lower than earlier this year–and the Fed is on track to continue cutting interest rates. 

“House hunters are monitoring mortgage rates closely, but so far, the increase in rates isn’t slowing buyers down. The home I listed on Thursday got a lot of traffic over the weekend and received 10 offers,” said Shoshana Godwin, a Redfin Premier agent in Seattle. “I’m advising buyers to make an offer if they love a home; don’t try to time the market. Rates have swung down and then up over the last few weeks, and we don’t know exactly what will happen in the next few weeks. A buyer may lock in a slightly higher rate now than they would have two weeks ago, but if they wait, it’s possible rates will increase more. It’s also possible rates drop more significantly, which could heat up competition.”

Sales are falling in coastal Florida, partly due to Hurricane Helene

Pending home sales are rising in most major metros, but they’re falling in some places, most notably Florida. In West Palm Beach, pending sales fell 17.6%, the biggest decline of the 50 most populous U.S. metros, followed closely by Tampa (-15.5%) and Miami (-14.8%). That’s due partly to Hurricane Helene, but coastal Florida’s housing market has been slowing over the last several months as insurance and HOA costs surge due to the increasing prevalence of climate disasters.

Hurricane Helene–and Hurricane Milton, which hit just days later–may have a bigger impact on future home sales; a recent Redfin survey found that nearly one-third of young adults are reconsidering where they want to move after seeing or hearing about damage caused by the hurricane. 

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page. 

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Refer to our metrics definition page for explanations of all the metrics used in this report.

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