Pending home sales over the past four weeks were down nearly 8 percent compared to the same time last year as mortgage rates ticked up slightly and harsh winter weather delayed homebuying, according to a new report from Redfin.
The fall in pending sales marked the largest decline since October, Redfin found. This comes as the daily average 30-year fixed mortgage rate is ticking back up toward 7 percent, after falling in recent months.
Mortgage rates, which have climbed over the past two years alongside interest rates, reached a two-decade high of 8 percent in late October before beginning to decline. However, daily average mortgage rates saw their biggest one-day jump in over a year last Friday, Redfin noted.
“We’re seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn’t up as much as we would expect at this time of year,” Chen Zhao, Redfin’s economic research lead, said in a statement.
“That’s because mortgage rates are climbing again and winter weather has been harsher than usual in much of the country, keeping some house hunters at home,” she added.
The Redfin report suggested that mortgage rates will “probably remain elevated near their current level” for at least the next two months, after Federal Reserve Chair Jerome Powell said it was unlikely that the central bank would begin cutting interest rates in March.
Interest rates currently sit at a two-decade high of 5.25 to 5.5 percent, after the Fed repeatedly raised rates in an effort to tame inflation. The central bank has held rates steady for its last four consecutive meetings, signaling that it may have concluded its rate hike campaign and prompting optimism about potential rate cuts.
However, Powell cautioned last week that the Fed needs to see “more good data” before it begins cutting interest rates.
“We want to see more good data. It’s not that we’re looking for better data,” he said, adding, “We need to see more evidence that sort of confirms what we think we’re seeing.”
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