Key Details:

  • Pending sales are down 35% year over year
  • That drop is the biggest in at least eight years
  • Home showing traffic is down 17% year over year

Pending home sales and home showing traffic are still on a downward slide, thanks to higher mortgage rates and punishing inflation. 

According to a new Redfin report, pending home sales for the four weeks ending October 27 are down 35.2% compared to a year ago—the biggest annual decline since January 2015, which is as far back as Redfin’s data goes. 


Source: Redfin

In addition, new data from the ShowingTime® Showing Index shows a year-over-year decline of 17% in home showing traffic—another sign of cooling buyer demand due largely to inflation and higher mortgage rates. 

Month-over-month declines in pending home sales

The Pending Home Sales Index (PHSI) — described by NAR as a “forward-looking indicator of home sales based on contract signings” — dropped to 79.5 in September. 

Breaking it down by region, NAR found:

  • The Northeast PHSI dropped 16.2% month over month to 64.2—30.1% lower than September 2021. 
  • The Midwest index dipped 8.8% month over month to 80.7—down 26.7% from a year ago. 
  • The South index declined 8.1% month over month to 97.0—30.0% lower than a year ago. 
  • The West index faded by 11.7% month over month to 62.7—down 38.7% from the same time last year. 

Home showing traffic still declining

ShowingTime’s data shows a continuing decline in home showing traffic, which is (so far) still above pre-pandemic norms. Showing activity in September dropped 17% year over year. 

All regions and the U.S as a whole saw month-to-month and annual drops in home showing traffic, with the Western region, in particular, seeing a 45% year-over-year decline. 

Showings in the Midwest and Northeast regions saw annual declines of 11.2% and 10.1%, respectively, while the South saw a 27% drop year over year. 

Red-hot pandemic markets in the West and South—including Seattle, Denver, Austin, and Phoenix—are seeing the steepest annual drops in homebuyer traffic. 

Home shoppers across the U.S. are still seeing less competition, with only 14 markets seeing moderate increases in showings per listing—compared to over 70 markets in August. 

Among these 14 markets were Boise and San Francisco, both recording 3% month-over-month increases in showings per listing. 

Top indicators of homebuyer activity

Redfin’s report included the following data on the leading indicators of homebuyer activity:

  • Google searches on “homes for sale” during the week ending October 22 were down 28% year over year. 
  • The Redfin Homebuyer Demand Index—a seasonally adjusted measure of requests for home-buying services from Redfin agents—was down 35% year over year and dropped 11% in the past four weeks to its lowest level since May 2020. 
  • Touring activity, as of October 23, dropped 27% from its level at the start of 2022, compared to a 7% increase the same time last year, according to ShowingTime. 
  • Purchase mortgage applications for the week ending October 21 were down 42% year over year and dropped 2% week over week, seasonally adjusted, to their lowest point since 2014. 

Source: Redfin

Until this month, the pullback in the housing market could be described as something of a return to pre-pandemic conditions before sub-3% mortgage rates ignited a homebuying frenzy in 2020 and 2021. But now both mortgage purchase applications and pending sales are below 2018 levels. A four-year setback is a serious correction. With mortgage rates still elevated, we are in for further sales declines, but those should eventually bring price relief to those who need to move this winter.

Taylor Marr

Redfin Deputy Chief Economist

Inflation and higher mortgage rates

Despite the year-over-year increase in inventory and recent moderate declines in home prices, affordability remains a challenge for many home shoppers. Combined with the normal seasonal slowdown, mortgage affordability challenges have kept more would-be buyers on the sidelines. 

Rates for a 30-year fixed rate mortgage rose to 7.08% for the week ending October 27. And while the Fed is determined to curb inflation with back-to-back increases in the federal funds rate, consumers are still paying more of their income on gas, groceries, and other expenses. 

Given a choice between paying hundreds more per month on housing and staying put, more consumers are choosing the latter and hoping conditions improve within the next year. 

Persistent inflation has proven quite harmful to the housing market. The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.

Lawrence Yun

NAR Chief Economist

Yun also pointed out that new home listings have declined compared to a year ago because many homeowners don’t have a compelling reason to give up the 3% mortgage they’ve locked down for their current homes. 

The new normal for mortgage rates could be around 7% for a while. On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago – a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.

Lawrence Yun

NAR Chief Economist

Every market has its trade-offs

Whatever’s going on in your market, it’s up to you to see past the daunting headlines to the opportunities your market offers—both nationwide and specific to your area. 

The year 2022 alone has seen dramatic changes in the market. At the start of the year, we saw frenzied buyer traffic and homes that sold within a week. Now, in mid-fall, we have buyers holding back and homes staying on the market for a month or even two. 

Cooling demand and increased inventory mean today’s buyers have more negotiating power. 

As an agent, remind prospective buyers in your community that sellers are now more likely to agree to lower prices and other concessions that can cover the cost of repairs and even reduce their mortgage rate. 

Find the opportunities each market presents, and keep your prospects in the loop. Treat them like insiders even before they express an interest in working with you.