Early indicators of homebuying demand show that buyers are returning after taking a hiatus in the lead-up to last week’s presidential election. Redfin’s Homebuyer Demand Index–a measure of tours and other buying services from agents–jumped more than 15% this past weekend to its highest level in nearly a year and a half. Mortgage-rate locks for home purchases more than doubled from a month earlier as of November 12, according to OptimalBlue data.
The jump in early-stage buying activity reflects pent-up demand that’s now being unleashed. Agents throughout the country reported that many house hunters took a break while they waited for the uncertainty surrounding the election to pass, and a survey from October found that nearly one-quarter of prospective first-time buyers were holding off until after the election. Now, even though mortgage rates are sitting near their highest level since July, home-sale prices are stubbornly high, and the typical U.S. housing payment is just $200 shy of its all-time high, some buyers are back. A separate survey, conducted just after the election, found that 22% of U.S. residents are more likely to consider moving now that the election is over.
Pending U.S. home sales rose 4.7% year over year during the four weeks ending November 10, in line with the increases we’ve seen over the last month. Pending sales are a lagging indicator; if this week’s uptick in early-stage demand continues, pending sales are likely to improve sometime in the next several weeks.
“There’s no question we saw homebuying demand bounce back this past month, but it’s bouncing back to the level we would expect with 7% mortgage rates and not much higher,” said Chen Zhao, Redfin’s economic research lead. “House hunting activity was much slower than expected this summer and early fall, especially given that rates dropped down to the 6% range. Buyers were waiting for the election to be over, and for the Fed to cut rates for the second month in a row. Both of those things happened last week, and now buyers don’t have much reason to wait–especially because we don’t expect rates to fall significantly anytime soon.”
On the selling side, new listings were unchanged from a year earlier. That’s the first time in a year they haven’t posted an increase, but it follows the listing trend we’ve been seeing for a month: For three of the last four weeks, listings increased by less than 1%.