Home sales, listings slump most since height of Covid crisis, report shows
The Good Brigade
As soaring mortgage rates and high home prices put buyers and sellers in a standstill, home sales and listings in September fell the most since the depths of the Covid-19 pandemic over two years ago, according to a Redfin report published Wednesday.
Specifically, the number of homes sold dropped 25% in September from a year before, while new listings tumbled 22%. Those declines were the largest since May 2020 and April 2020, respectively.
Redfin Economics Research lead Chen Zhao pointed out that "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.”
And with monthly housing payments amid two-decade high mortgage rates causing homebuyers to stay put, deals are increasingly drying up and buyer competition is falling, Redfin noted.
As such, 60K home-purchase deals were cancelled in September, the report showed. That's equal to 17% of homes that went under contract at the time - the highest percentage on record with the exception of the onset of the pandemic in March 2020.
“The housing market is going to get worse before it gets better," Zhao added. "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.”
The overall slump in homebuying demand has already resulted in cancellation rates pushing up at a number of publicly-traded homebuilders, including D.R. Horton (NYSE:DHI), KB Home (NYSE:KBH), PulteGroup (NYSE:PHM), Toll Brothers (NYSE:TOL) and Beazer Homes USA (NYSE:BZH).
Mortgage REITs: Annaly Capital (NYSE:NLY), AGNC (NASDAQ:AGNC), Chimera (NYSE:CIM), Two Harbors (NYSE:TWO), Orchid Island (NYSE:ORC), New York Mortgage Trust (NASDAQ:NYMT) and MFA Financial (NYSE:MFA). SA contributor Colorado Wealth Management Fund mapped out some positive developments taking hold for mortgage REITs after a tough year.
Earlier, housing starts fall more than expected in September, building permits rise.