Home sales post biggest drop in four months thanks to high mortgage rates, but experts insist you can STILL haggle a good deal
- There were 8% fewer pending home sales last month compared to last year
- Mortgage rates have fallen from record highs, but borrowing is still expensive
- Home touring activity is on the rise, up 16 percent since January 1
Home sales fell 8 percent in January compared to last year, as high mortgage rates and harsh winter weather may have deterred Americans from buying.
Last month, pending home sales fell by the most since October, when borrowing costs reached a record high, according to a monthly report from Redfin.
Although interest rates have fallen, they still seem high enough to hold buyers back. This week, the 30-year fixed mortgage rate was 6.64 percent, according to government-backed lender Freddie Mac.
While deals aren't closing on home purchases, a growing number of Americans are taking stock of the market, the Redfin report said. Between the beginning of the year and February 6, touring activity increased by 16 percent.
Pending home sales fell 8 percent compared to last year thanks to high mortgage rates and harsh winter weather, a Redfin report shows
This week, the 30-year fixed mortgage rate was 6.64 percent, according to government-backed lender Freddie Mac.
“We're seeing a bit of a recovery among house hunters touring homes, but even early-stage demand hasn't risen as much as we would expect at this time of year,” said Chen Zhao, Redfin's head of economic research.
“This is because mortgage rates are rising again and winter weather is harsher than normal in much of the country, causing some house hunters to stay home.”
And on February 2, mortgage rates rose the most in a single day after the January jobs report showed that the US added more jobs than expected.
That was interpreted as a sign that the Federal Reserve's fight against inflation may not be over and that it will likely keep interest rates high for some time to come.
It is therefore expected that mortgage interest rates will remain high in the coming months. Combined with high home prices, this means Americans may remain reluctant to buy.
The average monthly mortgage payment is now $2,607, Redfin reported. That's about $100 lower than the all-time high in October.
According to the report, touring activity increased 16 percent between the beginning of the year and February 6
'The high mortgage interest rates brought the local market to a virtual standstill from August to November. Activity picked up as rates fell slightly in mid-December, and now they are slowing again as rates rise,” Redfin agent Luis Rojas said in the report. .
He suggested that perspective buyers eager to move on may still be able to find mortgage rates lower than the stated averages.
“I advise buyers – especially first-time buyers – that the mortgage rates they see in the news are not the only thing,” he said.
“Some local lenders are willing to give 5 percent rates on new construction projects because any business is better than no business.”