Pending Home Sales Held Steady in Final Run-Up to Election Despite 7% Mortgage Rates

While home sales remained mostly resilient to election jitters and rising rates, Redfin agents report that some house hunters were waiting to hit the pavement until they knew more about the direction of the country and economy. 

Pending U.S. home sales rose 4.3% year over year during the four weeks ending November 3, in line with the increases we’ve seen over the last six weeks. 

The fact that pending sales held up in the final run-up to Tuesday’s presidential election is somewhat surprising, especially considering that this year’s election season was highly uncertain and anxiety-inducing. Redfin economists say they would also expect high mortgage rates to deter buyers more than they have; mortgage rates have jumped to 7% over the last few weeks, pushing the typical monthly mortgage payment up near its highest level since July. The results of the election are likely to push rates even higher for the foreseeable future; daily average mortgage rates already increased from 7.05% to 7.13% on Wednesday. It’s worth noting one reason pending sales are up is that we’re comparing to a period last year when near-8% mortgage rates drove down sales.  

But there are signs that house hunters at earlier phases of the homebuying process pressed pause as the presidential campaigns drew to a close and rates rose. Redfin’s Homebuyer Demand Index–a measure of tours and other buying services from Redfin agents–is at its lowest level since mid-September, and mortgage-purchase applications are down 5% week over week. Redfin agents in places like Philadelphia, Phoenix, Atlanta and Charlotte, NC, are reporting that a fair amount of prospective buyers sat on the sidelines over the last few weeks.

“Buyers have been  jittery the last few weeks  because of the election. Most of the buyers I’m meeting are looking at a house or two, then telling me they’ll be back in the new year,” said Corey Stambaugh, a Redfin Premier agent in Charlotte. “Some buyers are also bummed out by high mortgage rates, but they tend to understand that rates will change in the future and they’ll probably be able to refinance. Plus, most buyers are used to rates in the 6% to 7% range, and they’ve adjusted their budgets and expectations accordingly.”

On the selling side, new listings rose just 0.3% year over year, the smallest increase in a year. New listings stumbled partly because some sellers were waiting until after Tuesday’s presidential election to list their home. 

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

Leading indicators

Key housing-market data

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

The post Pending Home Sales Held Steady in Final Run-Up to Election Despite 7% Mortgage Rates appeared first on Redfin Real Estate News.