Home sales continue to decline and mortgage applications are at their lowest level in 25 years.

(NASDAQ: RDFN) — Pending home sales and new listings both saw their biggest year-over-year drops since the start of the pandemic, dipping to levels roughly on par with April 2020, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

U.S housing market activity is continuing to slow down as mortgage rates sit at a 20-year high. Mortgage-purchase applications fell to their lowest level in 25 years, according to the Mortgage Bankers Association.

Sales are dropping more than listings. Sellers are still catching on to the prices buyers who are in the market are willing and able to pay in the face of near-7% mortgage rates. Homes are taking twice as long to sell as they did in the spring. A record share of sellers are dropping their asking price and the typical home is selling for 1% less than its final asking price–the biggest discount since August 2020.

“With rates sitting above 6.5% for three weeks and no indication they’ll come down before the end of the year, people are only buying and selling homes if they need to,” said Redfin Economics Research Lead Chen Zhao. “Prospective buyers are waiting for prices and/or mortgage rates to come down and sellers want to squeeze as much money out of their sale as possible. Homes will eventually sell, but it may take a few months, and sellers need to meet buyers where they are. That means lower prices and negotiations, including things like giving buyers a credit to buy down their mortgage rate and paying for home repairs. Prospective sellers may also consider renting out their home for a few months until demand recovers.”

“Buyers should keep similar things in mind when they’re doing the math of which homes they can afford,” Zhao continued. “Try negotiating down the sale price; now’s the time to make what would have been considered a lowball offer six months ago. Ask for concessions and repairs to make up for high mortgage rates.”

Leading indicators of homebuying activity:

• For the week ending October 20, 30-year mortgage rates rose to 6.94%, up slightly from last week and a 20-year high.
• Fewer people searched for “homes for sale” on Google. Searches during the week ending October 15 were down 32% from a year earlier.
• The seasonally adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 31% year over year to its lowest level since May 2020.
• Touring activity as of October 16 was down 25% from the start of the year, compared to an 8% increase at the same time last year, according to home tour technology company ShowingTime.
• Mortgage purchase applications were down 4.5% week over week (seasonally adjusted) to their lowest level since 1997 during the week ending October 14. They were down 38% from a year earlier.

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, this data covers the four-week period ending October 16. Redfin’s weekly housing market data goes back through 2015.

• The median home sale price was $367,083, up 6% year over year and on par with the previous week.
• Home-sale prices fell from a year earlier in three U.S. metro areas: Prices declined 4% year over year in Oakland, 2% in San Francisco and 1% in Philadelphia.
• The median asking price of newly listed homes increased 8% year over year to $378,225.
• The monthly mortgage payment on the median asking price home climbed to a near-record high of $2,552 at the current 6.94% mortgage rate, up 50% from $1,704 a year earlier, when mortgage rates were 3.01% and up from a recent low of $2,203 during the four-week period ending August 14.
• Pending home sales were down 32% year over year, the largest decline since April 2020.
• New listings of homes for sale were down 19% from a year earlier, the biggest decline since May 2020.
• Active listings (the number of homes listed for sale at any point during the period) fell 1% from the prior four-week period. On a year-over-year basis, they rose 5%.
• Months of supply—a measure of the balance between supply and demand, calculated by dividing the number of active listings by closed sales—rose to 3.1 months. That marks the highest level since June 2020.
• 35% of homes that went under contract had an accepted offer within the first two weeks on the market, little changed from the prior four-week period but down from 39% a year earlier.
• 23% of homes that went under contract had an accepted offer within one week of hitting the market, little changed from the prior four-week period but down from 28% a year earlier.
• Homes that sold were on the market for a median of 34 days, up more than a full week from 26 days a year earlier and the record low of 17 days set in May and early June. Typical time on market has steadily increased since June.
• 30% of homes sold above final list price, down from 44% a year earlier and the lowest level since August 2020.
• On average, a record high 7.9% of homes for sale each week had a price drop, up from 3.9% a year earlier.
• The average sale-to-final-list price ratio, which measures how close homes are selling to their asking prices, fell to 98.9% from 100.5% a year earlier. That’s the lowest level since August 2020.

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-days-on-market-doubles-sales-drop

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

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