A new report from Redfin suggests that although elevated mortgage rates continue to dampen homebuying demand, low inventory means homes are selling fast in some parts of the country.
The pool of homes available to buyers is shrinking quickly, mainly because new listings are scarce, Redfin says. New listings fell 21.8% from a year earlier nationwide during the four weeks ending April 2, one of the biggest drops since the start of the pandemic, contributing to an unseasonal early-spring decline in the total number of homes for sale.
Many homeowners are staying put because they’re unwilling to give up their low mortgage rate. Although average 30-year mortgage rates posted their fourth-straight decline this week, dropping to 6.28%, that’s more than double the sub-3% rates common in 2021.
Buyers are snapping up the homes that do hit the market fast, Redfin adds. Of the homes going under contract, nearly half are doing so within two weeks. That’s up from about one-quarter at the start of the year, an unusually quick winter increase. It would take 2.8 months for today’s supply of for-sale homes to sell at homebuyers’ current consumption rate, the shortest time since September. That’s a sharp drop from the three-year high of 4.5 months in late January and it marks the fastest winter decline in months of supply since at least 2015, in percentage terms. It’s up from a near-record-low of 1.9 months a year ago.
Still, pending home sales are down 19% year over year, nearly as much as new listings. That’s partly because homebuying demand is lower than it was last year and partly because so few homes are hitting the market.
“Elevated mortgage rates are perhaps an even bigger deterrent for would-be sellers than for would-be buyers,” says Redfin Deputy Chief Economist Taylor Marr. “Giving up a 3% mortgage rate for one in the 6% range is a tough pill to swallow. Today’s serious homebuyers have grown accustomed to the idea of a 5% or 6% rate and have adjusted their budgets accordingly. The lack of homes hitting the market explains why the market is moving fast even though sales are still down. The lack of new listings is also one reason why sales are down: Buyers can’t buy if sellers don’t want to sell.”
While new listings are down in every major U.S. metro, the trend is more drastic in some areas. For instance, in Denver, where new listings are declining at roughly the same pace as the national drop, there are just 1.6 months of supply.
In Austin, a pandemic homebuying hotspot, buyers can take their time and they have a better chance of getting a home under list price. Inventory is piling up – Austin has 4.4 months of supply, more than almost anywhere in the country – and prices are down nearly 15% year over year, more than any other metro.
Home prices dropped in more than half (28) of the 50 most populous U.S. metros, with the biggest drop in Austin (-14.7% YoY). Next come four West Coast metros: Sacramento (-11.7%), Oakland (-10.4%), San Jose (-10.2%) and Seattle (-9.6%). That’s the biggest annual decline since at least 2015 for Seattle.
On the other end of the spectrum, sale prices increased most in Milwaukee, where they rose 11.4% year over year. Next come Fort Lauderdale (8.9%), West Palm Beach (8.2%), Miami (7.9%) and Columbus (6.3%).
On a national level, the median U.S. home-sale price fell 2.1% year over year to roughly $362,000, marking the seventh straight week of declines after more than a decade of increases.
