Despite elevated mortgage rates that have kept many homebuyers away from the market, a slight upsurge in demand coupled with a record low number of homes for sale helped prop up housing prices during the month of June. That is, according to a new report from Redfin.
The median U.S. home sale price was $426,056 in June, just 1.5% ($6,341) below the all-time high of $432,397 set in May 2022.
June’s median sale price was down 0.6% from a year earlier – the smallest decline of the past five months – and the average home sold for more than its list price for the first time in roughly a year.
“Today’s housing market is extraordinary; it feels hot even though there are very few homes changing hands,” says Daryl Fairweather, Redfin chief economist . “Sellers are getting multiple offers if their home is priced well and in a desirable area even though there aren’t a lot of buyers out there. That’s because house hunters have so few homes to choose from.”
While mortgage rates are expected to start gradually declining in response to cooling inflation, they’re unlikely to fall enough to bring a critical mass of sellers back to the market anytime soon, meaning housing supply should remain low. When rates do ultimately fall more significantly, prices will likely jump as more buyers move off of the sidelines.
In affordable areas, home prices climbed relatively quickly. In Rochester, N.Y., the median sale price rose 13.1% year over year to $250,000 – the biggest increase among the metros Redfin analyzed. It was followed by Milwaukee (11.6%) and Omaha, Neb. (10.4%).
Prices fell most in Boise, Idaho (-10.4%), Austin, Texas (-7.8%) and Las Vegas (-7.8%) – pandemic boomtowns that saw prices surge as scores of remote workers moved in.
Seasonally adjusted pending home sales rose 1.9% from a month earlier in June to the highest level since fall, representing the largest monthly increase since October 2021. Pending sales have now climbed for three consecutive months on a revised basis following 16 straight months of declines. Pending sales fell 16.2% year over year in June, the smallest annual decline in a year. Still, pending sales in June were lower than they were at any point during the three years leading up to the pandemic.
The total number of homes for sale dropped 15% year over year to an all-time low in June, the biggest annual decline in nearly two years. New listings fell 30.6% from a year earlier to roughly 450,000 – the lowest level and largest annual decline on record aside from April 2020, when the onset of the pandemic brought the housing market to a halt.
“High rates are still giving a lot of buyers pause, but the sticker shock is no longer as severe as it was when rates skyrocketed last year,” adds Fairweather. “With home prices back near record highs, buyers are also less worried that they’ll buy a house that’ll plunge in value.”
Photo by R ARCHITECTURE on Unsplash.