It may be a slow start to the new year, but Redfin reports there is a glimmer of hope amongst the latest market data. While homes are selling at their slowest pace since the beginning of the pandemic, online home searches and tour requests are up.
The typical home that sold during the four weeks ending January 8 was on the market for 44 days, the longest timespan since April 2020. Additionally, per Redfin, pending home sales dropped 32 percent year-over-year to their lowest level on record and mortgage-purchase applications dropped to their lowest level since 2014.
But there are signs that early-stage demand is up. Redfin’s Homebuyer Demand Index–a measure of tour requests and other buying services from Redfin agents–posted a 6 percent increase over the last month, and Google searches for “homes for sale” are on the rise—up nearly 50 percent from their November low during the week ending January 7, but down about 17 percent from a year earlier.
Year-over-year, the Index was down 29 percent.
“We’re entering 2023 with positive economic news: The latest consumer price index report confirms that the worst of inflation is behind us. That means the Fed is likely to continue easing its interest-rate increases, which should cause mortgage rates to continue gradually declining. This could bring back some homebuyers in the coming months,” said Redfin Deputy Chief Economist Taylor Marr. “We’ve already seen an uptick in people initiating home searches. Although those house hunters haven’t yet turned into buyers, they may soon given that monthly mortgage payments are notably down from their peak and the latest inflation and employment data lower the chances of a recession.”