America Is in a Homebuyer Recession: Mortgage Purchase Applications Are Down 60% From Their Pandemic Peak
Demand is lower than at any point in the housing crash
America appears to be in a homebuyer recession. Mortgage purchase applications are down 60% from their pandemic peak, per Redfin, and homebuying demand is now back near 1995 levels, lower than at any point during the 2008 to 2012 housing crash. The collapse in applications comes as mortgage rates sit above 7%, pending home sales hover near record lows, and a record 14% of September deals were canceled.
Mortgage purchase applications are down 60% from their pandemic peak, per Redfin, and homebuying demand is now back near 1995 levels, lower than at any point during the 2008 to 2012 housing crash.
Sellers keep showing up anyway
The demand collapse has produced the widest buyer-seller imbalance in Redfin's records. Sellers outnumbered buyers by a record 63% in September, with an estimated 928,892 homebuyers in the market, the lowest level in records dating back through 2013, against roughly 1.51 million sellers, the most since March 2020. More than 80% of major metros, 41 of the 50 Redfin analyzed, are now buyer's markets. Prices are barely holding up anyway: the median sale price rose just 1.3% year over year to $393,895, the smallest increase since February.
"This is a buyer's market born out of caution, not strength," said Redfin senior economist Asad Khan. Would-be buyers have been priced out or scared off by economic uncertainty, he said, while many sellers are listing out of necessity or because they have given up waiting for rates to fall. The irony, Redfin noted, is that supply conditions are among the best buyers have seen in years, but costs are so high that few can take advantage of them.
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A buyer strike at 7% mortgage rates is a direct hit to housing activity, and the transmission runs through builders and lenders first: XHB on order books and cancellations, and mortgage-exposed names in XLF on origination volumes. Record cancellations also pressure anything tied to transactions rather than prices.
Watch the weekly MBA application prints and Redfin's demand index for any response if rates slip back below 7%, and follow housing data on the Unusual Whales news feed.
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