Pending home sales dropped by half in San Diego in October amid rising mortgage interest rates
Here’s another sign that San Diego’s homebuying market is slowing.
Pending home sales — when the seller has accepted a buyer’s offer but the deal hasn’t closed — dropped 49.6 percent in October year-over-year in the San Diego metropolitan area, according to a Redfin study released Nov. 4. The drop was 33 percent nationwide.
Pending home sales are often viewed as a key indicator of existing home sales because they usually go under contract a month or two before they are sold.
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Of the 10 most populous cities in the United States, only Phoenix had a bigger pending-sale drop (54.3 percent) than San Diego. San Jose was down by 47.1 percent, Chicago 44.2 percent, Houston 40 percent and Los Angeles 38.8 percent.
Nationwide pending sales have not fallen so far since at least 2015, Redfin said.
With mortgage interest rates hitting their highest level in 20 years, they bring higher monthly payments for buyers, meaning some of the most expensive West Coast markets are seeing some of the fastest drops in sales. In other cases, places that saw some of the fastest gains during the COVID-19 pandemic — such as Phoenix — are now falling quickly.
“Mortgage rates may take longer to come down than many have expected,” wrote Redfin deputy chief economist Taylor Marr, “which means housing trends could continue to worsen as the economy adjusts to higher rates.”
The region is experiencing a housing downturn as mortgage rates continue to rise. San Diego County’s median home price is down 6% from its peak in the spring
Redfin said there were other indications that the real estate market cooled. It said the number of people searching Google for “homes for sale” in the last week of October was down 32 percent from a year earlier, mortgage purchase applications were down 41 percent and the number of people taking home tours dropped 33 percent (according to data from ShowingTime).
Some other nationwide indicators and how they relate to the San Diego metropolitan area:
- New listings were down 18 percent from a year earlier; 25 percent in San Diego.
- Active listings were up by 7.4 annually and 34.4 percent in San Diego.
- About 34 percent of homes had an offer within two weeks. It was 41.2 weeks in San Diego.
- The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, was 98.7 percent in the four weeks ending in October. In San Diego, it was nearly identical — 98.6 percent.
- On average, 7.9 percent of homes for sale each week had a price drop. It was 8.7 percent in San Diego.
Homes are still selling more quickly in San Diego than the national average. Nationwide, homes sold within a median of 35 days, up from 27 days a year earlier. In San Diego, homes sold in a median of 26.5 days, down from 27.7.