October saw a one-third year-over-year decline in the total share of homes under contract as 7% mortgage rates led to a drop in buyer demand and forced sellers to lower their asking prices. During the final week of the month, however, budget-conscious buyers made a gradual comeback after a small but promising dip in 30-year mortgage rates, Redfin reports.
During the week ending Nov. 3, 30-year mortgage rates fell to 6.95%, and in response, Google searches for “homes for sale” ticked up one point from the previous week, mortgage purchase applications fell at the slowest pace in five weeks, and Redfin’s Homebuyer Demand Index rose half a percent.
“This week the Fed brought into view the light at the end of the tunnel for slowing the pace of interest rate hikes, but that the tunnel’s exit may be more dreadful than expected,” said Redfin Deputy Chief Economist Taylor Marr. “There is also a glimmer of hope in the data that buyers stopped leaving the market as mortgage rates leveled off this week, but we’re still deep in a market that is coping with the pains of higher mortgage rates. Mortgage rates may take longer to come down than many have expected, which means housing trends could continue to worsen as the economy adjusts to higher rates.