Key Takeaways
- According to a report from real estate data firm Redfin, homebuyer demand was 11% lower than the month prior in early January.
- Pending sales and new listings saw their steepest drops since 2023.
- The Southern California wildfires and cold weather across the country undercut housing activity, the report said.
Wildfires in Southern California and cold weather in other parts of the country kept potential homebuyers from shopping in early January, according to a report released this week.
Redfin’s Homebuyer Demand Index was 11% lower month-over-month for the four weeks ending Jan. 12. The measurement of home tours and other buying activity reached its lowest levels since August.
The report also showed that pending home sales were down by 8.4% over the same time last year, the biggest decline since October 2023. The 3.6% decline in new listings year-over-year was the steepest since September 2023.
Freezing Temperatures Effect Demand in Some Regions
Demand was down broadly in the Northeast, Midwest and South, much of which can be attributed to frozen temperatures and snow, Redfin said.
An arctic blast and winter storm dropped temperatures in many states and some experienced snowfall and sleet for much of January. The cold kept many house hunters inside and discouraged homeowners from listing their homes during such low demand, Redfin said.
Los Angeles Area Home Demand Impacted by Wildfires
The report showed that in the Los Angeles area, pending home sales were down by 4% compared with last year, while listings declined by 2.5%. The decline in homebuying activity comes as wildfires have ravaged the area in recent weeks. Officials reported 25 deaths, and AccuWeather estimated between $250 billion and $275 billion in damages from the natural disaster.
According to Redfin Economic Research Lead Chen Zhao, sales and listings in the area will likely decline further in the coming weeks. But home demand in the area is likely to move higher, as people who lost residences during the disaster will now be looking for new places to live. Interest in rental properties is expected to surge.
“So many people now have to find new homes, and we’re seeing a chaotic ripple effect in the market,” said Susan Brown, a Redfin Premier agent in the Los Angeles area, in the report. “I’ve personally had three people who lost their homes reach out to me to start searching, and we all have an influx of clients looking for rental properties.”