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Pending home sales fell 2.4% year-over-year in the four weeks ending April 5, according to Redfin, the largest decline in three months, largely due to higher mortgage rates related to the Iran war. The weekly average 30-year fixed mortgage rate was 6.46% through April 2, up from 5.99% five weeks earlier. Economic instability caused by the conflict is discouraging people from buying homes in the spring. Economists say the ceasefire announcement could cause oil prices to fall, causing a market rebound and allowing mortgage rates to return to the low 6% range. Despite home prices rising 2.2% annually and the pace of sales slowing, conditions for buyers remain favorable, with an increasing number of listings and a median contract length of 51 days. Sellers should focus on strong marketing and home presentation.
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Pending home sales fell 2.4% year-on-year, the biggest decline in three months, as mortgage rates soared in the four weeks to April 5 due to the Iran war and homebuyers pulled out.
Pending home sales fell 2.4% year-on-year, the biggest drop in three months, as mortgage rates soared in the wake of the Iran war and homebuyers pulled out in the four weeks ending April 5, according to Redfin’s latest report.
The weekly average 30-year fixed mortgage rate rose to 6.46% in the week ending April 2, the highest level since September, up from a four-year low of 5.99% just five weeks ago. As of April 8, the daily average was 6.38%.
The main factor behind the surge is war. The market turmoil caused by the conflict has driven up interest rates and created widespread economic uncertainty, deterring buyers who could become active this spring.
The ceasefire announced on Tuesday marks a potential turning point. Oil prices fell and markets rallied on the news, with economists saying the move could push mortgage rates back into the low 6% range.
The interest rate environment is not the only headwind. Home sales prices rose 2.2% annually, the most significant increase in a year, and the median monthly mortgage payment rose to $2,750. The Easter weekend, which fell within this reporting period but not during the comparable period last year, temporarily kept some buyers and sellers out of the market. The number of new listings decreased by 2.6% compared to the same month last year, the largest decline in the month.
Despite the decline, conditions remain favorable to buyers in most regions of the country. Nationwide, homes are under contract for a median of 51 days, the slowest pace since 2019 to this point, and the number of active listings continues to increase.
“There are more homes on the market than buyers, so sellers need to make sure their home stands out,” said Jesse Lundin, a Redfin Premier agent in San Antonio. “The most important day is the photo day. It determines whether house hunters will actually walk through your home.”
Lundin advised sellers to paint walls, make repairs and hire an agent with a concrete marketing plan for the property. “Buyers with larger down payments and higher monthly payments want a home that’s as close to perfect as possible because they have more options on the market,” he said.
Email Jesse Healy
