Redfin: Home-Price Growth Slows as Mortgage Rates Drop
The median U.S. home-sale price increased just 3.5% year-over-year in the four weeks ending February 23, marking the smallest rise since September. According to a new report from Redfin, the technology-powered real estate brokerage, mortgage rates have dropped to their lowest level in over two months, falling from 7.13% to 6.78% in just two weeks. This decline is improving buyers’ purchasing power by thousands of dollars. The drop in mortgage rates is largely driven by signs of a slowing U.S. economy and rising recession concerns.
More Negotiation Power for Buyers
In addition to reduced costs, buyers are gaining leverage in price negotiations as housing inventory increases in several parts of the country. The current market has 4.6 months of supply, up from 4 months a year ago, giving buyers more room to negotiate. Additionally, the average home is selling for roughly 2% less than its asking price.
There are signs that a combination of lower mortgage rates, slowing price growth, and improved buyer conditions is drawing more house hunters back to the market. Redfin’s Homebuyer Demand Index, which tracks tours and other buying services, has climbed to its highest level since the start of the year. Google searches for “homes for sale” have also reached their highest level since September.
Home Sales Remain Sluggish
Despite improved demand, pending home sales have yet to show signs of recovery, remaining down 6.2% from a year earlier. While mortgage rates have dipped, the typical monthly housing payment remains just $32 below its all-time high. If increased home touring activity translates into more offers and mortgage rates continue their downward trend, sales may pick up in the coming weeks.
Timing the Market
Some Redfin agents are advising buyers to act now, as economic and political uncertainty could push mortgage rates back above 7%. Inventory could also tighten again, as new listings of homes for sale are up just 2.4% from last year, the smallest increase in a month.
“My advice to buyers: If you’re thinking of purchasing a home in the next six months, don’t wait until the flowers start blooming,” said Alison Williams, a Redfin Premier agent in Sacramento, CA. “The market will heat up as we get closer to spring. Now is the time to negotiate a lower price, save on closing costs, or get sellers to cover repairs. There are bidding wars for homes under $400,000 and high-end, fully renovated properties in desirable neighborhoods, but mid-range homes are sitting longer. The buyers making offers now are getting great deals.”
Key Market Indicators
- Mortgage Rates: The daily average for a 30-year fixed mortgage dropped to 6.78% (as of February 26), its lowest level since December 10.
- Homebuyer Demand: Redfin’s Demand Index is up 5% from a month ago but still 4% lower than a year ago.
- Touring Activity: Up 19% since the beginning of the year, though slightly below last year’s pace.
- Google Searches for “Homes for Sale”: Up more than 20% from a month ago and 10% year-over-year.
Housing Market Trends (Four Weeks Ending February 23, 2025)
- Median Sale Price: $377,250 (+3.5% YoY, the smallest increase since September)
- Median Asking Price: $412,253 (+5.8%)
- Median Monthly Mortgage Payment: $2,762 (at a 6.85% rate), just $32 below the record high
- Pending Sales: 73,415 (-6.2%)
- New Listings: 81,553 (+2.4%)
- Active Listings: 907,659 (+9.7%, the smallest increase in nearly a year)
- Months of Supply: 4.6 months (+0.7 points), nearing a balanced market
- Median Days on Market: 56 days (+6 days YoY)
- Share of Homes Sold Above List Price: 21.7% (down from 24% YoY)
- Sale-to-List Price Ratio: 98.1% (down from 98.3%)
Regional Market Highlights
Metros with the Largest Price Increases:
- Cleveland (+13.1%)
- San Jose, CA (+12.6%)
- Nassau County, NY (+12%)
- Detroit (+10.8%)
- Milwaukee (+10.5%)
Metros with Price Declines:
- Austin, TX (-5%)
- Jacksonville, FL (-2.8%)
- Tampa, FL (-2.1%)
- Atlanta (-0.3%)
Pending Sales Growth:
- Highest: San Francisco (+26.9%), Los Angeles (+12.2%), Anaheim, CA (+10.4%)
- Largest Declines: Houston (-17%), Miami (-16.6%), Minneapolis (-16.1%)
New Listings:
- Most Growth: Phoenix (+23%), Los Angeles (+22.2%), Sacramento (+19.4%)
- Biggest Declines: Detroit (-21.4%), Warren, MI (-13.1%), Montgomery County, PA (-10.5%)
About Redfin
Redfin is a technology-driven real estate company offering brokerage, rentals, lending, and title insurance services. With the #1 real estate brokerage website, Redfin helps customers save on fees while working with top agents. Since launching in 2006, Redfin has saved customers over $1.6 billion in commissions. The company operates in over 100 markets across the U.S. and Canada and employs more than 4,000 people.
