Homebuyers demand for mortgages, prices continue to decline

More homebuyers are looking for housing as mortgage rates and home prices continue to wane, according to Redfin recently.

Mortgage purchase applications fell for the fourth week in a row, according to the brokerage's latest data. Redfin's Homebuyer Demand Index reached its highest level since May 2022 during the week ending March 26.

The index is a seasonally adjusted measure of requests for tours, home offers or requests to talk to an agency about a home search.

San Francisco Redfin agent Ali Mafi said that most of the calls coming in are from first-time buyers or investors.

Mafi said that first-time buyers are interested in looking at homes because prices have come down, but they are still concerned about high mortgage rates.

Mortgage buyer Freddie Mac reported on Thursday that the average 30-year-fixed-rate mortgage fell to 6.32% for the third consecutive week, down from an average of 6.42% a week ago. It's still well above the average 4.67% reported a year ago.

Mafi said that investors who can pay in cash are honing in on luxury San Francisco condos because prices on those have fallen even more than the overall market. This uptick in the early stages of home buying hasn't translated into more home sales yet. In the week ending March 26, pending sales fell 19% compared to a year ago, for the largest decline in two months, according to Redfin.

Demand for homes hasn't yet translated into an improvement in sales, mainly because would-be buyers are limited by lack of supply, according to the report.

Since the start of the epidemic, new listings of homes for sale have fallen 22%, the biggest decline for the home market since the beginning of the year, as homeowners are more reluctant to sell and give up a low mortgage rate.

There is a growing share of homes flying off the market because of the lack of new listings, according to Redfin.

Nearly 50% of the homes are being scoped up within a two-week period, according to the brokerage.