The housing market has seen a remarkable turnaround, with the highest homebuying demand in 15 months marking a significant shift in activity. According to Redfin, their Homebuyer Demand Index surged 17% year-over-year in November 2024, its biggest increase since January 2022. This jump comes as a surprise to many, considering mortgage rates remain historically high. Despite this, the combination of post-election momentum and Federal Reserve rate cuts has brought eager buyers and sellers back into the market.
What Is Driving the Surge in Demand?
Following the recent election and two consecutive interest rate cuts by the Federal Reserve, homebuying demand has soared. Redfin data highlights that the weekly average mortgage rate is 6.78%, down from 7.44% a year ago, fueling renewed interest in the housing market. This demand isn’t just anecdotal; pending home sales have risen by 4.5% year-over-year, while mortgage-purchase applications are up 2% week-over-week.
According to Chen Zhao, Redfin’s Economic Research Lead, the increase reflects pent-up demand from buyers who were waiting for the election cycle to end and monetary policy to become more favorable. Zhao notes that while some buyers are still cautious, others are diving in, accepting that rates may not drop significantly anytime soon.
What the Highest Homebuying Demand Means for Buyers and Sellers
The surge in demand benefits both buyers and sellers, although challenges persist. Meme Loggins, a Redfin Premier agent, advises buyers to act now if they can afford higher borrowing costs, as prices in many markets are lower than last year but are expected to rise as competition heats up. Sellers, on the other hand, have an opportunity to capitalize on the presence of motivated buyers, particularly as desirable properties remain in high demand.
For those still hesitating, touring activity and Google searches for “homes for sale” also indicate increasing interest. Touring activity is down just 3% from the start of the year, a marked improvement compared to last year’s 19% drop. Meanwhile, searches for homes are up 15% from the previous month.
Regional Insights and Key Metrics
Across the U.S., metros like Cleveland, Newark, and Milwaukee are leading in year-over-year median sale price increases, while cities like San Jose and Dallas are seeing the highest gains in pending sales. Active listings rose 11.8%, offering more options for buyers, though the number of new listings increased marginally by just 0.4%.
This trend is not uniform, however, as markets like Miami and Atlanta reported decreases in pending sales and new listings. Still, with the highest homebuying demand in over a year, most regions are seeing improved activity.
Seizing the Moment in a Competitive Market
As we move deeper into the holiday season, the question remains: will this surge in homebuying demand sustain itself or fade away as a short-term post-election phenomenon? While mortgage rates are unlikely to fall significantly in the near term, the momentum suggests a healthier market compared to last year’s downturn.
For now, buyers and sellers alike have a rare opportunity to navigate a competitive market that still offers potential advantages for both sides.
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