Redfin chief economist says homebuyer FOMO is one reason for the unseasonable uptick in home prices

Home prices ticked up unseasonably and fast sales became more common in October, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The national median sale price during the four-week period ending October 31 was up 13% compared to the same period last year and 1.5% from three weeks earlier. This is compared to a 0.1% increase over the same period in 2019

Mortgage rates were down slightly in the latest week, but have risen 30 basis points since August and the share of homes sold in one week rose to 33%, up 2.2 percentage points since September 12. During the same period in 2019, the share of homes sold in a week fell 1.2 points.

"Rising mortgage rates have lit a fire under many homebuyers," said Redfin Chief Economist Daryl Fairweather. "Fear of missing out (FOMO) is always a powerful force in this supply-constrained housing market, but especially so today for buyers who weren't able to snag a home last year before mortgage payments shot up by 15%. With this renewed FOMO, the housing market is heating up from the slight lull a few months ago."

Key housing market takeaways for 400+ U.S. metro areas:
Unless otherwise noted, this data covers the four-week period ending October 31. Redfin's housing market data goes back through 2012.

• The median home-sale price increased 13% year over year to $357,007. This was up 30% from the same period in 2019 and up 1.5% since the four-week period ending October 10. Over the same period in 2019 prices were essentially flat (+0.1%), and in 2020 home prices rose 0.4%.
• Asking prices of newly listed homes were up 12% from the same time a year ago and up 27% from 2019 to a median of $357,381.
• Pending home sales were up 5% year over year, and up 51% compared to the same period in 2019.
• New listings of homes for sale were down 7% from a year earlier, but up 8% from 2019.
• Active listings (the number of homes listed for sale at any point during the period) fell 22% from 2020, and were down 40% from 2019.
• 45% of homes that went under contract had an accepted offer within the first two weeks on the market, above the 41% rate of a year earlier and the 30% rate in 2019. Since the four-week period ending September 19, the share of homes under contract within two weeks is up 1.6 percentage points. During the same time in 2019, the share fell 1.2 points.
• 33% of homes that went under contract had an accepted offer within one week of hitting the market, up from 29% during the same period a year earlier and 19% in 2019. Since the four-week period ending September 12, the share of homes under contract within a week is up 2.6 percentage points. During the same time in 2019, the share fell 1.2 points.
• Homes that sold were on the market for a median of 23 days, a full week longer than the all-time low of 16 days seen in late June and July, down from 31 days a year earlier and 45 days in 2019.
• 45% of homes sold above list price, up from 35% a year earlier and 22% in 2019.
• On average, 4.7% of homes for sale each week had a price drop, up 1.1 percentage points from the same time in 2020, up 0.1 points from 2019.
• The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, was flat at 100.6%. In other words, the average home sold for 0.6% above its asking price.

• Other leading indicators of homebuying activity:

  • Mortgage purchase applications decreased 2% week over week (seasonally adjusted) during the week ending October 29. For the week ending November 4, 30-year mortgage rates fell to 3.09%.
  • From January 1 to October 31, home tours were up 0.2%, compared to a 9% increase over the same period last year, but higher than the -2% change in 2019, according to home tour technology company ShowingTime.
  • The Redfin Homebuyer Demand Index fell 2.2 points during the week ending October 31, and was up 14% from a year earlier.

  To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-market-update-higher-rates-boost-buyer-urgency/