Redfin Corp Stock Price, News & Analysis

Sales of luxury U.S. homes fell by 38.1% year over year for the three months ending November 30, 2022, marking the largest decline on record, according to Redfin. This drop outpaced the 31.4% decline in non-luxury home sales. Factors contributing to this decline include economic stress, high inflation, and a sagging stock market. Despite the downturn, there are early signs of renewed buyer interest as mortgage rates decrease. The supply of luxury homes for sale rose by 5.2%, the largest increase since 2016, while home-price growth slowed to 10%.

Redfin reports a slight revival in buyer interest as home prices and mortgage rates decline. The typical U.S. home price is now $352,000, down 10% from June's peak of $391,000. Mortgage rates have fallen to 6.27%, reducing monthly payments by nearly $300. However, sales have not yet increased, with pending home sales down 32.6% year-over-year. Notably, home prices in 14 major U.S. metros have decreased year-over-year, with significant declines recorded in cities like San Francisco and Phoenix.

Redfin reported a significant slowdown in the housing market for November 2022, with home sales falling 35.1% year-over-year, marking the steepest decline since 2012. The median home sale price rose only 2.6%, the lowest increase since May 2020. New listings dropped 28.4% year-over-year, while overall supply increased by 4.6%. Despite early signs of demand returning due to falling mortgage rates, total sales remain low. The average 30-year fixed mortgage rate was recorded at 6.81%, up 3.74 percentage points from last year, impacting buyer activity.

In October, all-cash home purchases in the U.S. reached 31.9%, marking the highest percentage since 2014, up from 29.9% a year prior. This increase is attributed to affluent buyers wanting to avoid high mortgage rates, currently above 6%. FHA loans also gained popularity, representing 14.6% of mortgaged sales, the highest in nearly two years. Notably, cash purchases surged in Riverside, CA (38%) and Cleveland (47%). Conversely, the Bay Area saw the lowest all-cash rates, at 14.3%.

Redfin reports that in the three months ending in November, 24.1% of homebuyers sought to relocate to a different metro area, matching a record high. Rising mortgage rates and inflation are impacting budgets, leading to a significant drop of over 30% in home sales year-over-year. Sacramento emerged as the top destination for relocation, while migration flows to popular areas like Las Vegas and Miami are decreasing. The trend reflects a shift towards more affordable locations as remote workers adjust to economic pressures.

Redfin's Homebuyer Demand Index has increased by 10% and mortgage-purchase applications have risen by 14% since October's lows. The decline in mortgage rates to 6.31% from a peak of 7.08% is driving this uptick, saving typical homebuyers over $200 monthly. However, year-over-year metrics indicate a significant drop in demand, with pending home sales down more than 30% and homes selling at the slowest rate in two years. The median home-sale price only rose 1.4%, the slowest growth since the pandemic started.

Redfin reports that only 3.4% of U.S. homeowners who purchased in the last two years would be underwater if home prices fall 4% by the end of 2023. The report indicates a typical home bought during this period would still gain approximately $27,000 in value. Areas such as Sacramento and Phoenix have higher risks of underwater mortgages, while Florida homeowners face the least risk. Despite potential price declines, a foreclosure crisis is not expected, though middle-class homeowners may see significant wealth loss.

The median asking rent in the U.S. rose by 7.4% year-over-year to $2,007 in November, marking the slowest growth rate in 15 months. This trend indicates a cooling rental market, with rents decreasing in 14 major metro areas, including Milwaukee (-13.1%) and Houston (-6.3%). Contrarily, Raleigh, NC saw the highest rent increase at 21.8%. Experts predict continued cooling in rent growth, which may contribute to reduced overall inflation and potentially lower mortgage rates, attracting more homebuyers to the market.

Redfin's Homebuyer Demand Index increased by 5% this week amid declining mortgage rates. The total number of homes available rose 15% year-over-year, marking the largest increase since 2015. However, new listings saw a decline of over 20%, indicating hesitant buyers. The average time a home was on the market increased to 37 days, the highest in recorded history. Though mortgage rates lowered to 6.33%, monthly payments remain 38% higher than last year.

Home prices decreased in 11 major U.S. metros, the first annual drop in Phoenix since 2015.