The U.S. housing market got some good news recently, with a surge in recent activity.
Redfin issued a report last week that showed that participation from both sellers and buyers in the market ticked up in November, forcing home prices to increase. This all coincides with the fact that mortgage interest rates have begun to drop.
Mortgage News Daily reported that the average 30-year fixed-rate mortgage was 6.64% last week, a steep drop from where it was just a few months ago.
Redfin reported that, in November, the median sale price of a home in the U.S. was $408,732. That’s a 3.7% increase from 2022, and represents the biggest growth since late last year.
Month over month, pending home sales also increased 2%, and reached their highest level in about a year, when taking into account seasonally adjusted factors.
Shay Stein, who is a premier real estate agent for Redfin based out of Las Vegas, pointed out in the company’s report that participants on both sides of the housing market are now starting to learn that they have to “live with” uncertainty that comes along with volatility in the housing market.
At the same time, they’ve realized that “no one has a crystal ball that can predict exactly when mortgage rates will fall back to 5 [percent].”
One other reason that there was such a positive reaction in the housing market in November is that sellers and buyers are now, for the first time in a while, living in this same reality.
As Stein outlined in Redfin’s report:
“A year ago, sellers had trouble understanding why they weren’t getting $20,000 over the list price like their neighbor did during the pandemic homebuying boom. Now, they understand that to sell their home, they need to price it fairly and in some cases offer the buyer concessions like money toward closing costs or mortgage-rate buydowns.”
New listings increased 1.3% from October to November, according to Redfin’s report. While that’s only a modest increase, it also marked the highest such performance since October 2022.
In addition, it was also the first time in more than a year-and-a-half that the U.S. housing market experienced a year-over-year increase in new home listings.
Yet, at the same time, overall active listings have dropped 7.9% from November 2022 to November 2023. According to Redfin, this indicates that the challenges in regard to inventory levels are continuing in the market.
This is all positive news, of course, but Redfin said the housing market isn’t yet out of the woods.
In November, roughly 16.9% of all agreements for home purchases ended up being canceled, which is the highest rate since back in 2017.
Stein said this shows that there’s still much apprehensive and uncertainty among buyers, a lot of which is fueled by concerns about the economy and personal finances, as well as the strain on affordability in the housing market.