Pending Home Sales Are Down 6%, But Falling Mortgage Rates Are Starting to Attract Buyers

Mortgage rates dipped to their lowest level in nearly three months this week, which has pushed mortgage-purchase applications up. But pending home sales are still falling. Southern California is bucking the trend, with pending sales increasing.

Pending U.S. home sales fell 6.4% from a year earlier during the four weeks ending March 2, the second-biggest decline since November 2023. 

Sales are  sluggish because the median U.S. sale price is up 3.2%, and the typical homebuyer’s monthly housing payment is just $26 shy of its all-time high. Plus, some prospective buyers are wary about making a big purchase amid economic uncertainty, including concerns about tariffs, slowing economic growth and layoffs.

But homebuyers have gotten some relief in the past week, as the daily average 30-year fixed mortgage rate dipped to 6.7%, the lowest level in nearly three months. That seems to have brought some people off the sidelines: mortgage-purchase applications rose 9% week over week.

In Southern California, Pending Sales Are Rising

The housing market looks different in different metro areas. In parts of California, for instance, sales and listings are rising. Pending sales increased in just six major U.S. metros this week, four of them in California. In Los Angeles, pending sales rose 8.5% year over year, the biggest increase among the major U.S. metros. It’s followed by Anaheim (6.3%), Phoenix (3%), Riverside (1.3%), Columbus, OH (1.1%) and Sacramento (0.4%). 

On the selling side, California is home to four of the five biggest year-over-year upticks in new listings. First comes Phoenix, where listings are up 27.1%, followed by Sacramento (27%), Anaheim (20.1%), Los Angeles (20.1%) and San Diego (17.5%). 

The Los Angeles market is picking up in the aftermath of January’s devastating wildfires, which destroyed thousands of homes. Some of the people displaced by the fires are buying new homes, some other buyers are jumping back into the market after pressing pause amid the fires, and  some homeowners are selling to meet demand. 

“Prices are up, homes are selling rapidly and overall, the housing market is strong,” said Sam Najarian, a Redfin Premier agent in Los Angeles. “That was true before the wildfires, and it’s true now. The fires have made it tough to get insurance and they’re causing buyers to look away from the hills, but the spring homebuying season is definitely underway in the rest of Los Angeles. Some listings are getting lots of offers, and the best ones are going for $200,000 or $300,000 over asking price.”

Najarian added that in the wake of the Eaton and Palisades fires, homebuyers should be diligent about insurance. If a home is deemed high risk because of proximity to a fire zone, buyers may have a hard time finding or affording homeowners insurance–and they should be aware premiums may rise more in a fire zone. Some house hunters are shifting their search from Altadena, which was hit hard by the Eaton fire, to Pasadena or other neighboring cities that have less stringent insurance regulations.   

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page. 

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