The housing market’s supply is gaining momentum and pending sales continue a steady and seasonal decline, according to a new report from Redfin.
The company predicted that as both of these trends continue in the weeks ahead, prices will stop rising as rapidly as they have been and an increasing number of homes for sale will see price drops.
The brokerage’s study looks at markets in 400+ U.S. metro areas over the four-week period ending July 18. The following are among its findings:
Pending home sales were up 9% year over year, the smallest increase since the four-week period ending June 28, 2020. Pending sales were down 11% from their 2021 peak during the four-week period ending May 30, compared to a 4% decrease over the same period in 2019.
The median home-sale price increased 20% year over year to $364,160, a record high.
Asking prices of newly listed homes were up 12% from the same time a year ago to a median of $360,975. This is shy of the all-time high set during the four-week period ending June 27, and asking prices have been basically flat since late May.
New listings of homes for sale were up 2% from a year earlier. The number of homes being listed is in a typical seasonal decline, down 8% from the 2021 peak during the four-week period ending May 23, compared to a 12% decline over the same period in 2019.
For the single week ending July 18, 4.9% of listings had price drops, on par with 2019 levels. Price drops are more common in places such as Phoenix, Austin and Bend, OR where prices rose the fastest due to an influx of Californians during the pandemic.
Even with the share of homes with price drops increasing, overall prices continue to rise. One factor contributing to that is falling mortgage rates, which hit their lowest level this week (2.78%) since early February.
“Just as buyers are pulling back, more listings are hitting the market,” said Redfin Chief Economist Daryl Fairweather. “I’m optimistic this will create conditions for a little bit of rain in this inventory drought. A homeowner who is thinking of selling to buy again is going to have a much easier time now than they would have back in March. That’s because it’s becoming less competitive to buy and it is still a historically good time to sell.”
The Redfin Homebuyer Demand Index remains higher than a year ago and has been trending up in recent weeks, suggesting that interest in home buying remains high (real estate searches on Google trends also show a recent bump).
However, mortgage purchase applications are trending down. Growth in new listings, which are still up 2% from a year ago, should offer some relief to potential homebuyers.