Redfin: Residential demand indicators down across the board since start of year

Since the beginning of 2022, the typical monthly mortgage payment for a homebuyer has risen by more than $500, and it’s taking a toll on the buyer pool, according to recent research from Redfin.

With mortgage rates steadily increasing from historically low levels, the impact has started to swing from motivational (pushing would-be buyers to take action before rates rise even more) to discouraging by sending buyers to the sidelines as rising costs surpass their budgets. Data from multiple sources so far this year has borne this out, Redfin reported, with fewer people starting online home searches and applying for mortgages compared to the first three months of 2021.

Google searches for “homes for sale,” for example, were down 9.7% year over year for the week ending March 19. Compare that to late January, when searches for the same term were flat year over year. Google searches for “homes for rent” and “real estate” also have dipped by 9.6% and 5.1%, respectively. And the Mortgage Bankers Association’s Weekly Mortgage Applications Survey has cooled, dropping by 12% year over year for the week ending March 18 and by 10% for the week ending March 25.

“Homebuyers may not feel like the market has gotten any easier,” said Daryl Fairweather, chief economist for Redfin. “That’s because they’re often competing against investors, all-cash buyers and migrants from expensive cities who aren’t as sensitive to mortgage rates.

“But there are early indicators that the market is turning, and we expect the softening to become more apparent in the coming weeks, eventually causing home-price growth to slow. We’ll be watching closely to see whether the market slows from 100 miles per hour to 90, or 100 miles per hour to 75.”

Redfin data reflects slowing demand, with the brokerage receiving fewer agent service requests in markets such as Seattle, San Diego, Boston and Washington, D.C. California markets are seeing the largest shifts, with the state seeing stark declines in searches, tours and mortgage applications compared to other areas.

“I’m starting to see early signs that the housing market is letting off some steam — something I wouldn’t have said a month ago,” said Aaron McCarty, a Redfin agent in the San Francisco Bay Area. “Bidding wars are still common, but homes that would have brought in 10 or more offers earlier this year are now getting half that many.

“Homes also aren’t selling as astronomically over the asking price as before. A house that might’ve gone for $700,000 over the list price two months ago may now go for $300,000 or $400,000 over.”


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