The number of homes sold that month dropped by 25 percent and new listings dropped by 22 percent, according to the report. That’s the largest decline in records in both categories other than in 2020 during the height of the COVID-19 pandemic, the report noted.
“The U.S. housing market is at another standstill, but the driving forces are completely different from those that triggered the standstill at the start of the pandemic,” Redfin economics research lead Chen Zhao said in a statement.
“This time, demand is slumping due to surging mortgage rates, but prices are being propped up by inflation and a drop in the number of people putting their homes up for sale,” Zhao added. “Many Americans are staying put because they already relocated and scored a rock-bottom mortgage rate during the pandemic, so they have little incentive to move today.”
The firm noted that while prices have dropped significantly, mortgage rates have pushed monthly payments up more than 50 percent year-over-year.
“The housing market is going to get worse before it gets better,” Zhao said. “With inflation still rampant, the Federal Reserve will likely continue hiking interest rates. That means we may not see high mortgage rates—the primary killer of housing demand—decline until early to mid-2023.”
Chicago, which has seen significantly high murders in recent years, and nearby Lake County, Illinois, were deemed the No. 1 and No. 2 respective slowest housing markets in the United States. Next were Charleston, South Carolina; Honolulu, Hawaii; and Pittsburgh, Pennsylvania.
About 60,000 home-purchase agreements were scrapped in September, the firm said, adding that’s equal to about 17 percent of homes that went under contract.
“That’s the highest percentage on record with the exception of March 2020—the month the World Health Organization declared the coronavirus a pandemic. Fewer than half (46 percent) of offers written by Redfin agents faced competition in September, the lowest share since the start of the pandemic,” the report said.
Redfin’s report comes as Freddie Mac found that mortgage rates hit their highest levels in 20 years last week with the 30-year fixed-rate mortgage averaging near 6.92 percent, or up from 6.66 percent a week before that.
