Home Buyer’s Reaction to Mortgage Rates Spike

During the peak summer home-buying season, macroeconomic factors have shaken things up a bit. Federal Reserve Chairman Ben Bernanke announced a tapering of bond buying if the economy continues to improve, and the markets reacted. Last Friday, June 21, saw an especially steep spike with interest rates jumping from 3.9 to 4.5 percent. Naturally, Redfin was paying especially close attention to the numbers that indicate homebuyer demand over the weekend to gauge the reaction. In short, there was nothing dramatic.

The number of people making offers on homes increased 4 percent over the weekend, compared to an average of the prior three weekends. There was a 1 percent increase in customers making offers. This indicates that people farther along in their home search accelerated in an effort to lock in a rate. However, new customers contacting Redfin dropped 11 percent when comparing last weekend to the average of the prior three, indicating that people just starting the process might be deterred.

More from the Wall Street Journal and Redfin CEO, Glenn Kelman

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