U.S. pending home sales dropped 35% year-over-year during the four weeks ending October 23, the largest annual decline since at least 2015, Redfin reports. From Google searches to home tours and mortgage purchase applications, homebuying activity slowed across the board at the end of October as 30-year mortgage rates rose to 7.08%.
With more rate hikes on the horizon, a market correction could accelerate in the months to come, causing for-sale inventory to pile up and home prices to fall in some of the nation’s most popular housing markets.
“Until this month, the pullback in the housing market could be described as something of a return to pre-pandemic conditions before sub-3% mortgage rates ignited a homebuying frenzy in 2020 and 2021,” said Redfin Deputy Chief Economist Taylor Marr. “But now both mortgage purchase applications and pending sales are below 2018 levels. A four-year setback is a serious correction. With mortgage rates still elevated, we are in for further sales declines, but those should eventually bring price relief to those who need to move this winter.”
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