Pending Home Sales Record Steepest Gain in Three Years

Are home buyers coming back? By one metric, the answer is unequivocally yes.

Pending home sales rose 2 percent year-over-year for the four-week period ending on Oct. 6, according to a Redfin report. That’s the biggest annual gain in roughly three years.

The report pointed to the Federal Reserve’s interest rate cut last month as a leading factor in bringing buyers to the table. The typical housing payment is down to $2,526 a month, close to the lowest level since the start of the year.

Pending home sales increased in a majority of the 50 most populous metros, led by a 14.1 percent year-over-year increase in Phoenix.

Notably, the four metros recording the biggest decline in pending sales were all in Florida, which is in the midst of historic hurricanes and rising insurance costs connected to climate change’s impact on the state. A recent survey by Redfin found one in three young adults were reconsidering where they would move upon news about Hurricane Helene and Hurricane Milton.

Zooming out, the growth of pending home sales could slow in the coming weeks, according to the report. Mortgage rates started tipping back up last week following a strong jobs report, though they remain well below the levels seen a year ago. On Monday, the daily average rate was 6.62 percent, against a 6.26 percent average last Thursday.

“A buyer may lock in a slightly higher rate now than they would have two weeks ago, but if they wait, it’s possible rates will increase more,” Redfin agent Shoshana Godwin said. “It’s also possible rates drop more significantly, which could heat up competition.”

In other market developments, the median asking price saw its biggest annual jump in two years, increasing 5.7 percent to $399,925. Meanwhile, active listings rose 18 percent in the four-week period covered in the report, representing the smallest annual gain in six months.