Home Buyers Not Ready to Take The Plunge

KEY TAKEAWAYS

• While housing inventory looks promising and property values remain higher, buyers still hesitant.
• Mortgage-purchase applications lower in more favorable market.
• High numbers of couples/individuals begin the home buying process and home viewings but want to avoid additional costs.
• Sellers should look to make concessions if projects are still needed on a home.

A recent report from Redfin reveals a 10 percent increase in new home listings compared to the same period last year, marking the most significant surge in two months, ending on Feb. 18.

Homeowners are optimistic about capitalizing on elevated property values, with sale prices experiencing a notable 6 percent uptick year-over-year, the most substantial rise since October 2022.

Despite the favorable market conditions for sellers, a substantial number of potential buyers remain hesitant. Mortgage-purchase applications recorded a 10 percent decrease from the previous week. This decline coincided with daily average mortgage rates exceeding 7 percent for the first time since mid-December. Additionally, pending home sales have seen a 7 percent year-over-year dip, echoing trends observed since mid-January.

Interestingly, amidst the overall slowdown, some prospective homebuyers are actively engaging in the early stages of the home-buying process. Redfin’s Homebuyer Demand Index, which gauges requests for property tours and assistance from Redfin agents, has rebounded from its mid-January low when severe weather conditions impeded demand.

Redfin agents note a preference among current buyers for homes that are move-in ready, as they seek to avoid additional expenses on repairs and renovations alongside already elevated monthly payments. To facilitate transactions in the face of 7 percent interest rates, agents recommend that sellers be open to offering financial concessions.

Shauna Pendleton, a Redfin Premier agent in Boise, Idaho, advises sellers to adopt a flexible mindset and empathize with buyers. She emphasizes that many buyers are now requesting concessions in their initial offers. The most common requests include mortgage-rate buydowns and coverage of closing costs. These concessions are prevalent not only for more affordable homes, typically under $500,000 in Boise, but also for higher-priced properties.

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