Home sellers are increasingly caving in to mounting affordability pressure imposed by June’s rapid rise in mortgage rates, according to a new report from Redfin, a technology-focused real estate brokerage.
The median asking price of newly listed homes for sale is down 1.5% from the record high reached in the spring, and a record share of sellers lowered their asking price in the four weeks ending on the 26th. June. sales have continued to decline, registering their largest decline since May 2020, but there are signs that demand from early-stage home buyers is beginning to level off.
Redfin Chief Economist Daryl Fairweather said: ‘Data on home visits, mortgage purchase offers and requests suggests homebuyers have noticed the shift in power and are no longer leaving the mass market. Returning buyers will provide support for the housing market, but between now and the end of the year, I believe the power will continue to shift to buyers, causing prices to decline slightly month on month. ‘other.
All in all, the prospect of returning to an office, a faster pace of rising interest rates due to inflation, being laid off and waiting for the housing market to calm down worries many potential buyers. , and that is understandable.
“On the other hand, sellers are adjusting to this new reality and learning that sometimes there’s not much they can do to increase buyer interest,” said Caroline Loudenback, Redfin-area real estate agent. Seattle.
“Sometimes the price isn’t even the reason a house stays on the market without selling,” she explained. “Some more remote areas that were popular during the pandemic are now being overlooked as shoppers reconsider long drives with high gas prices. It’s a tricky market, and you need to pay close attention to your local sales and listings to understand what’s going on.
“It’s a fact that many households are being hit by higher mortgage rates because they are no longer earning the qualifying income for the median price home,” said Nadia Evangelou, senior economist and director of forecasting for the National Association of Realtors. “In the second quarter, buying a home became 15% more expensive, increasing qualifying income from $90,000 to $104,000. As the seasonal trends end after the summer months, an even greater reduction in home buying activity is likely to occur.
Meanwhile, inventory is improving. According to the National Association of Realtors, inventory rose 25% in April and May, compared to 8% – the pre-pandemic average for the same period. “With more homes available on the market, the price gains will taper off as they increase at a slower rate,” Evangelou explained.
Leading Indicators of Home Buying Activity
- For the week ending June 30, 30-year mortgage rates fell slightly to 5.7%.
- Fewer people searched for “homes for sale” on Google – searches in the week ending June 25 were down 7% from a year earlier.
- The seasonally-adjusted Redfin Homebuyer Demand Index – a measure of requests for home visits and other home-buying services from Redfin agents – was down 15% year-over-year in the week ending June 26, but up 7 points from the previous week.
- Touring activity as of June 26 fell 3% year-to-date, compared with a 24% increase at the same time last year, according to home touring technology company ShowingTime.
- Mortgage purchase requests were down 24% from a year earlier, while the seasonally adjusted index rose 0.1% week-over-week in the week ending May. June 17.
Housing market highlights for over 400 metropolitan areas
Unless otherwise stated, this data covers the four-week period ending June 26. Redfin’s weekly housing market data dates back to 2015.
- The median home sale price rose 14% year over year to a record high of $399,249.
- The median asking price for newly listed homes rose 15% year-over-year to $405,547, but was down 1.5% from the all-time high set during the four-week period ending May 22.
- The monthly mortgage payment on the median asking price rose to $2,459 at the current mortgage rate of 5.7%, but is down slightly from the high of $2,494 in the four-week period ending the 12 June. , when mortgage rates were 2.98%.
- Pending home sales fell 13% year-over-year, the biggest drop since May 2020.
- New home listings for sale were down 7% from the previous year.
- Active listings (the number of homes listed for sale at any time during the period) fell 8% year over year, the smallest decline since March 2020.
- 46% of homes under contract had an offer accepted within the first two weeks on the market, up from 49% a year earlier.
- 32% of homes under contract had an offer accepted within a week of being put on the market, compared to 36% a year earlier.
- Homes sold were on the market for a median of 17 days, up from 18 days a year earlier and up slightly from the record low of 15 days set in May and early June.
- 54% of homes sold above the list price, compared to 53% a year earlier. This measure peaked in mid-May and has fallen 2.5 points since then. Last year it peaked in mid-July.
- On average, 6.5% of homes for sale each week saw a price drop, a record as far back as the data goes, to early 2015.
- The average sale-to-listing price ratio, which measures how well homes are selling relative to their asking price, fell to 102.2%. In other words, the average home sold for 2.2% above its asking price. This figure was 102.1% a year earlier.