Buyers briefly returned as rates dipped, but the window may already be closing
American homebuyers returned to the market in force during the four weeks ending May 3, pushing pending home sales to their strongest level since September 2022, according to new data from Redfin.
Seasonally adjusted contract signings rose 7.7% year over year, a headline figure that offers a measure of encouragement to mortgage brokers who have spent much of the past two years navigating a frustratingly slow purchase market.
The surge was driven by a convergence of factors that briefly lowered the cost of buying.
The median monthly housing payment fell 2.2% year over year to $2,606, as the 30-year fixed mortgage rate pulled back to 6.23%. That's down from a six-month high of 6.46% two weeks earlier.
That window may have been short-lived: daily average rates climbed back to 6.56% later in the week amid renewed geopolitical tensions tied to fighting in Iran.
Inventory conditions also improved. The total number of homes for sale rose approximately 1% year over year to near their highest level in at least five years, giving buyers more options and lenders more opportunities to put purchase loans into the pipeline.
Read more: Spring buyers return as pending sales jump despite mortgage rate jolt
Google searches for "homes for sale" reached their highest level in nine months as of May 4, according to Google Trends data cited in the Redfin report, rising more than 20% year over year.
Despite the headline improvement, the underlying market remains softer than seasonal norms would suggest.
The typical home that went under contract spent 43 days on the market — three days longer than a year ago — and just 26.4% of homes sold above list price, the lowest share for this time of year in at least five years.
The average sale-to-list price ratio slipped to 98.7%, down from 99% a year earlier, and 18.8% of active listings carried a price reduction.
Redfin data also showed that only 39.2% of homes went off market within two weeks, compared to 40% a year ago, and that months of supply edged down slightly to 3.5. That's still below the 4-to-5 months typically considered a balanced market, but a sign that supply constraints remain a structural drag on volume.
With new listings falling 1.8% year over year on a seasonally adjusted basis, the supply picture is not improving fast enough to fundamentally shift the market's character.
Chicago offered a window into the bifurcated dynamics shaping the national picture.
"Some homes are attracting multiple offers, but only those that are priced fairly and have been updated," said Ashley Arzer, a Redfin Premier agent in the city.
"A new kitchen and new bathroom are the ticket to a bidding war. Older homes that need repairs, and those far above the most popular price range — around $400,000 in Chicago — are taking longer to sell."
Read more: Pending home sales defy rising rates, signaling pent-up buyer demand
That price sensitivity is reflected in metro-level data. Pending sales rose 19.2% in Chicago, 16.5% in Pittsburgh and 15.2% in San Francisco, while Miami and Austin each posted gains above 14%.
On the other hand, Houston saw pending sales fall 9.3% year over year — a reminder that even in a broadly improving environment, local market dynamics vary considerably.
Median sale prices remained elevated but relatively contained. The national median came in at $394,803, up 1.9% year over year, while the seasonally adjusted median asking price of $406,493 rose 1.5%.
Meanwhile, Mortgage Bankers Association data cited by Redfin showed purchase applications fell 4% week over week for the week ending May 1, though they remained 5% above year-ago levels.
The week-over-week decline underlines how quickly momentum can dissipate when rates move even modestly — a dynamic that will continue to test brokers' ability to manage client expectations through an uneven buying season.
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