Pending sales and home tours remain fairly strong as mortgage rates rise to their highest levels since mid-summer and uncertainty around the election picks up

(NASDAQ: RDFN) — Pending U.S. home sales rose 3.5% year over year during the four weeks ending October 20, the biggest increase in three years (with the exception of the prior 4-week period, when they rose 3.7%). That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. On a local level, pending sales are up in 35 of the 50 most populous U.S. metros, the most in three years.

Demand is also holding up at earlier stages of the homebuying process. Redfin’s Homebuyer Demand Index–a measure of tours and other buying services from Redfin agents–hit its highest level since May and is up 3% year over year.

Redfin economists say pending sales and home tours are performing surprisingly well in the face of high housing costs and uncertainty surrounding the upcoming election. Chen Zhao, Redfin’s economic research lead, said she would expect a bigger dropoff in homebuying demand given how much mortgage rates have increased in the last few weeks. The weekly average mortgage rate is 6.44%, up from a two-year low of 6.08% at the end of September, and the daily average is 6.92%, its highest level since July.

Election uncertainty, stronger-than-expected economy are pushing mortgage rates up

Mortgage rates are jumping because investors’ expectations of the impending election are shifting, and because the most recent jobs and inflation reports showed the economy is a bit stronger than expected.

“Investors in the bond market are particularly worried about the possibility of increased government debt after the election,” Zhao said. “They’re concerned that one party could end up controlling both the White House and Congress, which would increase government spending more. That concern, along with strong economic data, is pushing up 10-year treasury yields and mortgage rates.”

High mortgage rates have pushed monthly housing payments near their highest level since July

Rising rates and stubbornly high home prices have pushed the median U.S. monthly housing payment to $2,587, the highest level since July (except the prior 4-week period, when the median payment was $2,591). Cash buyers may be propping up home sales: Mortgage-purchase applications fell 5% in the last week, dropping near their lowest level in a year, even as pending sales and early-stage demand hold up.

On the selling side, new listings of homes for sale are up 2.2% annually, one of the smallest increases in a year.

“There are buyers out there, especially for homes in desirable locations with highly rated schools and counties with lower taxes,” said Shari Mosteller, a Redfin Premier agent in Atlanta. “But more buyers are negotiating on price, asking for concessions and money toward closing costs. On my listings, I’m seeing a trend of buyers asking for minor repairs and/or cosmetic items. Many are getting creative with different types of mortgages, opting for an adjustable rate or a shorter loan period. That said, a fair amount of folks, both buyers and sellers, are waiting on the sidelines until after the election because they feel a lot of uncertainty in the housing market.”

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

Key housing-market data

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-demand-holding-up-mortgage-rates-rise

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. 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 have our renovations crew fix it up 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 $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

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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