Pending home sales posted their smallest year-over-year increase (7%) since late June 2020, according to a Redfin report. The supply of homes for sale continued to plateau as the number of newly listed homes for sale followed its slow seasonal decline.
Home sales have now fallen 12% from their 2021 peak. Refin says this is a seasonal decline that should be expected, but added that it is a slightly larger drop than we’ve seen in years past.
By comparison, pending sales dropped 8% during the same period in 2019.
The homes that are still selling are getting top dollar, depending upon which part of the market they attract.
Redfin also reported last week that the median sale price of U.S. luxury homes jumped 25.8% year over year in the second quarter, while the median sale price of the country’s most affordable homes rose 18.7%. By comparison, prices of mid-priced and affordable homes grew just 16% and 13.2%, respectively.
“Home prices and sales plummeted at the beginning of the pandemic, but have now more than recovered—especially in the luxury and most affordable price tiers—due to low mortgage rates and strong homebuyer demand during the pandemic,” Redfin Chief Economist Daryl Fairweather said. “Surging prices can be especially problematic for first-time and lower-income homebuyers, but the good news is that the supply of the country’s most affordable homes is growing. That means there could be more homes to choose from and less competition for buyers in that segment of the market.”
Home sales have soared across the board during the pandemic as Americans have taken advantage of low mortgage rates and the flexibility to work from anywhere. But sales in the luxury and most affordable price tiers have seen especially large increases.
For luxury homes, that’s partly because affluent Americans have reaped the gains of a strong stock market and swelling savings accounts. For the most affordable homes, it’s likely due in part to a rebound in investor activity, the company said.