in Affordability, Daily Dose, Data, Featured, Market Studies, Market Trends, Migration, News, Real Estate 6 days ago 290 Views
According to a new report from Redfin, the share of U.S. homes for sale dropped 6% from a year earlier, representing the biggest decline in 13 months.
New listings also dropped 23%, continuing a 10-month streak of double-digit declines. Those add to the growing post-pandemic inventory shortage, as new data finds there are 39% fewer homes for sale now than there were five years ago, in June 2018.
The inventory crunch is partly due to a homebuilding slump that’s lasted for over a decade and partly to mortgage rates falling to record-low levels during the pandemic, then skyrocketing. Mortgage rates have more than doubled since 2021, landing at close to 7% this week. The record-low mortgage rates of 2020 and 2021 drove a homebuying boom, depleting inventory. When rates started going up at the beginning of 2022, many would-be home sellers backed off, failing to fill the inventory hole. Elevated rates continue to discourage homeowners who would prefer to hold onto a comparatively low rate from selling.
Leading indicators of homebuying activity:
Pending home sales are down 17% year-over-year, the biggest decline in over four months, but it isn’t all due to a lack of demand. People are still showing interest in homebuying. Mortgage-purchase applications rose 8% over the last week, and Redfin’s Homebuyer Demand Index is up over the last two weeks, near its highest level in a year. That means there’s a fair amount of pent-up demand, and many homebuyers will be ready to jump when more homes hit the market. Demand significantly outpacing supply is preventing home prices from falling drastically. New data also found that the median sale price is down just 1.1%, the smallest annual decline in three months.
This week’s economic news indicates that mortgage rates are unlikely to decline in the next few months, which may mean new listings stay low for the time being and the inventory shortage grows. The latest inflation report shows that price increases have continued to cool, and the Fed announced that it will pause interest rate hikes this month after nearly a year of increases but may hike a couple more times this year.
“The Fed’s indication that there are more rate hikes to come is not what homebuyers want to hear. It’s likely to keep mortgage rates elevated and may even push them up a bit,” said Redfin Economics Research Lead Chen Zhao. “People who are sitting on the sidelines, waiting for mortgage rates to decline, should know that’s unlikely to happen in the foreseeable future. If a home that’s in your price range and has everything on your wish list hits the market, there’s no good reason to wait.”
Key housing market takeaways for 400+ U.S. metro areas:
To read the full report, including more data, charts, and methodology, click here.
Tagged with: active listings asking price Chen Zhao Home Sellers Homebuyers Homes for Sale Homes on market Homes that sold Homes Under Contract Housing Demand Housing studies Housing Supply housing trends Interest rate hikes Interest rates list price market studies Market Trends Mortgage Rates new listings pending listings pending sales Redfin the fed The Federal Reserve
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