The U.S. housing market has been hit hard by extreme weather – from the wildfires in Southern California to the freezing cold and snow in the Northeast, Midwest and South – at the start of the new year, in addition to the rising cost of homes.
These factors have dampened home tours and caused a drop in pending sales during the four weeks ending on Jan. 12, according to the real estate brokerage firm Redfin.
Still, Redfin said it’s still “too early in the new year to determine how 2025’s housing market will shape up.”
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Redfin’s Homebuyer Demand Index, which is a seasonally adjusted measure of tours and requests for other buying services from Redfin agents, has fallen 11% month over month, notching its lowest level since August.
Pending home sales fell 8.4% year over year, which marked the biggest decline since October 2023. New listings had their biggest annual decline since September 2023, falling 3.6% on an annual basis.
Active listings rose 9.8% year over year, which was also the smallest increase in nearly a year, according to Redfin data.
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Meanwhile, the median housing payment nationwide is also at its highest level in over two months. Home prices have jumped 5.8% year over year and daily average mortgage rates also hit their highest level since May last week.
In California specifically, homebuying demand and listings in the Los Angeles metro has been dampened due to the wildfires that started earlier this month.
In turn, Redfin said it’s driving up buying and rental demand from those who have been displaced. In particular, Los Angeles pending sales fell 4% year over year and new listings fell 2.5% during the four-week period ended Jan 12. Redfin doesn’t believe this drop would have been as big if the wildfires hadn’t started.
Redfin is also projecting to see bigger declines in the coming weeks.
“Many Redfin agents are pivoting to helping people find rentals as soon as possible,” said Susan Brown, a Los Angeles-based Redfin Premier agent. “Because rentals are going so fast, my advice for people searching for housing is to directly reach out to a real estate agent for help.”
The frigid temperatures and snow in other parts of the country are also keeping buyers at bay. It is also delaying homeowners from putting up their homes for sale, according to the agency.
