New listings of homes for sale fell 15% year over year in the four weeks ending August 21, the biggest annual decline since the start of the pandemic. As a result, the supply of for-sale homes fell 0.6% from the previous four-week period – a slight decline – but just the second such drop since February, according to a new report from Redfin.
The dearth of homeowners putting their homes up for sale is partly a reaction to reduced demand and falling prices as there are fewer buyers in the market due to rising mortgage rates and economic uncertainty.
Those who are listing their homes are starting to price in line with lower demand. The median asking price of newly listed homes dropped 5% from the record high set in May, and sale prices dropped 6% from the record high set in June. The share of for-sale homes with a price drop leveled off after rising throughout the spring and early summer.
“Sellers are coming to terms with the fact that volatile mortgage rates have dampened demand. Some sellers are pricing lower, and some homeowners are staying put because they’re nervous they won’t get a good offer or they’re hesitant to give up their low mortgage rate,” says Chen Zhao, Redfin’s economics research lead. “Because the number of homes for sale is no longer rising, buyers’ newfound bargaining power is reaching its limit.”
“It’s worth noting that early demand indicators such as tours and requests for help from agents are elevated from their June lows and remain steady,” continues Zhao. “So there is a pool of interested buyers out there, but sellers need to price fairly to attract them. If more sellers and buyers find that middle ground on price, we could see sales strengthen a bit.”
For the week ending August 25, 30-year mortgage rates rose to 5.55%. That’s down from a 2022 high of 5.81%, but up from 3.22% at the start of the year.
Fewer people searched for “homes for sale” on Google. Searches during the week ending August 20 were down 16% from a year earlier, but up 12% from late May.
The seasonally adjusted Redfin Homebuyer Demand Index was down 12% year over year during the week ending August 21. But it was up 18% from the 2022 low in June.
Touring activity as of August 21 was down 6% from the start of the year, compared to a 12% increase at the same time last year, according to home tour technology company ShowingTime.
Mortgage purchase applications were down 21% from a year earlier during the week ending August 19, while the seasonally adjusted index was down 1% week over week.
Key housing market takeaways for 400+ U.S. metro areas:
Unless otherwise noted, this data covers the four-week period ending August 21. Redfin’s weekly housing market data goes back through 2015.
The median home sale price was $371,125, up 6% year over year. Prices have declined 6% from the record high of $394,775 hit during the four-week period ending June 19. A year ago, they rose 0.6% during the same period.
Only two metro areas saw a year-over-year decline in their median home-sale price, both in the Bay Area: Oakland, CA, where prices fell 0.5% to $937,500, and San Francisco, where prices were down 3.9% to $1,453,750.
The median asking price of newly listed homes increased 10% year over year to $382,475. Asking prices are down 5% from the all-time high set during the four-week period ending May 22. Last year during the same period they were down just 0.4%.
The monthly mortgage payment on the median asking price home was $2,305 at the current 5.55% mortgage rate, up 38% from $1,665 a year earlier, when mortgage rates were 2.87%. That’s down from the peak of $2,461 reached during the four weeks ending June 12.
Pending home sales were down 17% year over year. New listings of homes for sale were down 15% from a year earlier, the largest decline since May 2020. Active listings (the number of homes listed for sale at any point during the period) fell 0.6% from the prior four-week period, the biggest decline since January 2022. On a year-over-year basis, they rose 4.3%.
Of homes that went under contract, 36% had an accepted offer within the first two weeks on the market, little changed from the prior four-week period but down from 43% a year earlier. Twenty-four percent of homes that went under contract had an accepted offer within one week of hitting the market, little changed from the prior four-week period but down from 30% a year earlier.
Homes that sold were on the market for a median of 25 days, up from 21 days a year earlier and the record low of 17 days set in May and early June. Of homes sold, 38% sold above list price, down from 50% a year earlier. On average, 7.7% of homes for sale each week had a price drop, a record high but unchanged from the prior four-week period.
The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, declined to 100.0% from 101.5% a year earlier. In other words, the average home sold at its asking price.
Read the full report here.
Image: “fannie-mae-freddie-mac” by hnnbz is licensed under CC BY 2.0