U.S. housing markets have hit a bump in the road to recovery, as mortgage rates ticked up for two straight weeks, ending a streak of steady declines.
In the week ending Thursday, Redfin’s home-demand index—a measure of requests for tours and other services—fell 1% from the prior week, the first decline after a month of increases, according to the latest data by the Seattle-based brokerage.
Buyer demand was stalled partly due to rising mortgage rates triggered by new economic data. “The somewhat disappointing inflation numbers put a wet blanket on home buyers after sub-6% rates lit a fire under them a few weeks ago,” Redfin’s economics research lead Chen Zhao said in the report.
For the week ending Thursday, the average 30-year fixed mortgage rose for the second straight week to 6.32%, up from 6.12% a week ago. The 30-year mortgage rates reached a 20-year record high of 7.08% near the end of October, and had since slowly edged down.
The two-week increase “doesn’t mean rates will soar past 7%,” Ms. Zhao said. “But it is a reminder that the housing-market recovery will remain touch-and-go until we see inflation and the overall economy improve for a longer duration.”
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Compared to a year ago, Redfin’s demand index was down 22%. But it was up 17% from its lowest point recorded in October 2022, according to the report.
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As buyers are retreating to sidelines, sellers have to adjust their price expectations.
During the four-week period ending Sunday, the median asking price of new listings was $378,118, up 1.2% year over year, the smallest increase since May 2020, according to the Redfin report.
The median sales price, meanwhile, was up 1% year over year to $346,725, with 20 of the 50 most populous metros tracked registering a decline.
Metros that experienced a housing market boom during the pandemic saw the largest decline, led by Oakland, California, where sales price declined 9.3% year over year. Other markets trending downward included Sacramento (-7.4%), Austin (-7.1%), Phoenix (-5.5%) and Detroit (-5.4%).
Metros that saw the largest price increases during the four weeks ending Sunday were: Milwaukee (13.6%), West Palm Beach, Florida (11.2%), Miami (9.9%), Columbus, Ohio (9.6%), and Fort Lauderdale (8.9%), according to Redfin.
