Redfin: Pending Sales Rise, Existing Sales Lag in September

In September, pending home sales rose 2.5% from August, marking the most significant increase since January 2023 and a year-over-year spike of 3.1%, the biggest since May 2021. Redfin’s report credits the rise to favorable mortgage rates and buyers seizing the moment before major hurricanes hit the South. However, closed sales of existing homes fell 0.5% month-over-month and 3% year-over-year, with sales at their lowest level since the pandemic began.

Overall, home sales—including both new and existing homes—dropped 0.2% month-over-month and 1.6% year-over-year. The median home price increased 3.9% to $428,212. While listings rose 0.8% from August, they were down 0.7% from a year ago and remain well below pre-pandemic levels. Homes sold in September typically spent 39 days on the market, compared to 33 days last year.

New Home Applications Decline 6% in September

New home purchase applications fell by 6% in September compared to the previous month, following typical seasonal trends. However, interest from first-time buyers stayed strong, with FHA loan applications accounting for nearly 29% of total applications. Despite the month-over-month drop, applications were up 10.8% compared to September 2023, reflecting steady demand for newly built homes.

MBA data showed that new single-family home sales were running at a seasonally adjusted rate of 680,000 units in September, down 12.4% from August. The average loan size increased from $395,935 to $402,658, indicating higher home prices. With mortgage rates slightly lower in September and more homes entering the market, demand for new homes is expected to remain steady.

Congress Raises Concerns Over FICO Score Pricing in the Mortgage Industry

Concerns in the mortgage industry regarding the rising prices of FICO credit reports have garnered attention from Congress. A group of lawmakers recently sent a letter to President Biden urging him to take federal action to lower housing costs. They suggested conditioning price-gouging protections for Fannie Mae and Freddie Mac multifamily loans, addressing junk fees, and promoting housing development on federal land. The letter also called for an investigation into FICO’s market practices, highlighting its near-monopoly status and the staggering 400% increase in the cost to acquire a FICO credit score since 2022. Analysts predict another price hike next year, raising the cost from $3.50 to at least $5.

The letter, signed by 28 Democratic representatives, five Democratic senators, and one independent senator, was led by Sen. Elizabeth Warren and Rep. Jamaal Bowman. It received support from several housing and financial reform organizations. The Community Home Lenders of America (CHLA) and the Mortgage Bankers Association also expressed concerns about FICO’s market dominance and its impact on consumers, particularly marginalized communities. They emphasized that increasing prices for this essential service would exacerbate affordability challenges for homebuyers and homeowners seeking to refinance.