Pending home sales drop the most in 17 months, Redfin says

While nationally, annual pending home sales have declined the most since November 2023, a handful of markets are on the upswing, Redfin said.

For four weeks ended March 2, pending sales were down 6.4% from the same period in 2024. That is a result of the median sales price rising 3.2%, with the typical home purchaser's monthly housing payment at $2,772, $26 below its all-time high, Redfin said.

A separate report issued Thursday by Corelogic showed home prices rose 3.3% in January over the prior year, although they were only 0.4 basis points higher than in December.

Going forward, Corelogic predicted no change in monthly prices in February, while annual appreciation will grow by 3.6%, it said in its Home Price Index report.

The national median home price was $375,000 and the income required to afford that house was $83,400, Corelogic found.

Housecanary found the median price of all single-family listings in February was $444,264, up 2.3% annually and 0.9% from the prior month. The median closed price was $424,106, 5.3% higher year-over-year and 3.8% from the prior month.

Its Market Pulse Report for February "highlights a housing market in transition, with rising inventory levels and steady contract activity signaling a move toward equilibrium."

Demand remains stable, with slight growth in contract volume, while those price trends "indicate continued resilience and affordability challenges," Housecanary said.

It found 257,403 listings that went under contract nationwide in February, a 1.9% increase over the same months in 2024. 

Redfin's median sales price for the period covered in its report was $379,500; the median price sellers were asking for was $417,250, up 6.4%.

The Redfin press release referenced the 9% rise in home purchase mortgage application volume from the latest Mortgage Bankers Association survey. But it came out before Freddie Mac released this week's Primary Mortgage Market Survey, which found a 13 basis point decline in rates on the 30-year fixed product and a 15 basis point reduction on the 15-year loan.

The National Association of Realtors' January pending sales report said activity was affected by the weather as well as higher mortgage rates.

But in six major metro areas, four in California (three of those in the southern half of the state), pending sales rose.

Los Angeles had the largest increase, 8.5% year-over-year, followed by its neighbor Anaheim at 6.3%. Phoenix ranked third at 3%, with Riverside, California, 1.3%; Columbus, Ohio, 1.1%; and Sacramento, California, 0.4%.

California cities occupy slots two-though-five on the list of major cities with the biggest upticks in new listings, trailing Phoenix, which was up by 27.1%. Next are Sacramento (27%), Anaheim (20.1%), Los Angeles (20.1%) and San Diego (17.5%).

In the Los Angeles area, following the wildfires that destroyed many houses, some of those displaced are purchasing new homes, others are jumping back into the market after putting their search on pause, while some consumers have decided to sell because of the high demand.

The market was strong even before the disaster, said Sam Najarian, a Redfin agent, in a press release.

"The fires have made it tough to get insurance and they're causing buyers to look away from the hills, but the spring home buying season is definitely underway in the rest of Los Angeles," Najarian said. "Some listings are getting lots of offers, and the best ones are going for $200,000 or $300,000 over asking price."

But Selma Hepp, Corelogic's chief economist, was more bearish, especially when it came to the buy side.

"Flattening home price changes over the last six months suggest further price deceleration is ahead," Hepp noted in a statement. "More importantly, compressed monthly changes highlight the general lack of home-buying demand that continues to characterize the current housing market."

Corelogic's report pointed out that of the 10 metros that had the largest annual home price increase, all but San Jose, California were in the Northeast. That region is bucking the national trend, with housing remaining unbothered by slower job growth, higher mortgage rates and the ongoing concerns about affordability.

Even with the expected no change for February, Corelogic predicted national single-family home prices would reach a new high in March.

"While this year's cold winter and large natural disasters play a role in dampening demand, falling consumer sentiment suggests potential homebuyers are wary of the short-term economic outlook and future inflation," Hepp added. "Nevertheless, with the spring home buying season upon us, the recent improvements in mortgage rates may help invite homebuyers back into the market."