BAM Key Details: 

  • A new Redfin report shows a 7.1% annual drop in homes for sale in May to 1.4 million, falling to the lowest level since at least 2012, the earliest year recorded by Redfin. 
  • Severe inventory shortfalls are propping up home prices and fueling competition, raising the average sale-to-list-price ratio to 100% after nine straight months of sub-100% ratios.

A new Redfin report shows fewer U.S. homes for sale in May than for any previous month on record, dating back to 2012. 

Active inventory dropped by 7.1% in May to a seasonally adjusted 1.4 million, marking the first annual decline since April 2022. 

For context, there were 2.2 million homes for sale in May 2019—before the start of the pandemic—making inventory levels for May of this year 38.6% lower than pre-pandemic levels. 

With nearly all homeowners locked into rates below 6%, rates hovering near 7% have convinced many sellers, as well as buyers, to hold off. And with that, new listings fell 25.2% year over year in May, dropping to the third lowest level on record (on a seasonally adjusted basis). 


Source: Redfin

The housing shortage is propping up home prices

The median home sale price in May was $419,103—down 3.1% from one year ago when prices reached a record high of $432,311. 

While home prices declined year over year in May, they did so to a lesser degree than in April, when prices fell 4.2% on an annual basis—the steepest drop on record with the exception of January 2012. 


Source: Redfin

It’s too early to say that price declines have bottomed out. Prices may have room to fall because mortgage rates could still rise. The Federal Reserve just signaled that it is likely to continue raising interest rates this year. That could further hamper homebuyer demand and cause home prices to fall in the near term, though the drops would be minimal. We’re unlikely to see double-digit price declines like we did during the 2008 housing crisis… 

Many people think it’s a bad time to buy a home because mortgage rates are high, but they should keep in mind that when rates do ultimately fall, many buyers waiting on the sidelines could jump back in. That could lead to more bidding wars since there aren’t enough homes for sale, and heightened competition could push up prices, offsetting some or all of the benefit of lower interest rates.

Daryl Fairweather

Redfin Chief Economist

The typical home purchased in the U.S. is no longer selling below the list price. The average sale-to-list price ratio rose to 100% in May, meaning the typical home sold at the list price. 

That’s a drop from 103.1% one year ago, but it’s the highest ratio of any pre-pandemic May on record. And it comes after nine months in a row of sub-100% sale-to-list price ratios. 


Source: Redfin

As usual, home price changes vary widely from one market to another. Metros that saw double-digit annual declines in home prices included Austin, TX; Boise, ID; and Oakland, CA. Metros where home prices climbed roughly 10% year over year included Hartford, CT; Rochester, NY; and Cincinnati, OH. 

Housing markets in pandemic boomtowns and pricey coastal hubs have slowed considerably as home prices return to earth after the unsustainable heights they reached during the pandemic. 

Record-low inventory is fueling competition across the U.S.

While buyer demand has cooled, new listings have declined even more, meaning many of the active home shoppers out there are meeting with more or less intense competition, depending on their market and price point. 

While the typical home purchased in May sold at list price, more than a third (37.5%) sold for more than their asking price—evidence that bidding wars are still happening. That figure is down from 59% in May 2022 but higher than any pre-pandemic May on record. 


Source: Redfin

Almost half of the home offers submitted by Redfin agents in May faced a bidding war—46.7% on a seasonally adjusted basis. That figure is down from 56.1% one year ago from the peak of 69.6% in January 2022, it’s worth noting that buyers in today’s market are still facing competition despite relatively sluggish demand. 

In Miami, for example, the severe shortage of housing inventory, combined with mortgage rates still near 7%, is turning up the heat for buyers—and leaving some out in the cold as all-cash buyers seize their advantage.  

May’s annual decline in home sales is less than it was at the start of the year

On a seasonally adjusted basis, closed home sales for May fell 19.8% compared to one year ago (May 2022), marking the smallest annual decline in almost a year—and an improvement from January’s record annual decline of 35.3%. 

That said, sales remained significantly below pre-pandemic numbers—down 21% from May 2019. 

Pending home sales performed in a similar fashion, falling 21.4% year over year in May, marking the smallest annual decline since last summer and an improvement from last November’s record annual decline of 36.1%. 

Pending sales were down 16.1% compared to May 2019. 


Source: Redfin

Metro-level housing market highlights

Here are May’s metro-level highlights for key housing market indicators: 

Pending Sales

In Boise, ID, pending sales dropped 70.1% year over year—more than any other metro in Redfin’s analysis. Next up were Baton Rouge, LA (-66%), and Allentown, PA (-54%). 

Metros with the smallest annual declines in pending sales were—

  • Dallas, TX (-0.3%)
  • Fort Worth, TX (-2.2%)
  • Buffalo, NY (-3.5%)

Closed Sales

Closed home sales fell 38.9% year over year in Tacoma, WA—more than any other metro in Redfin’s analysis, followed by Seattle (-34.7%) and Portland, OR (-32.9%). 

Metros with the smallest annual declines in closed sales: 

  • Atlanta, GA (-1.5%)
  • North Port, FL (-2.1%)
  • Fort Worth, TX (-4.4%)

Home Prices

Median sale prices fell year over year in 40 of the metros analyzed by Redfin. The biggest annual declines were in— 

  • Austin, TX (-15.1%)
  • Boise, ID (-14.3%)
  • Oakland, CA (-11.2%)

Metros with the biggest annual increases in median sale prices were— 

  • Hartford, CT (10%)
  • Rochester, NY (9.7%)
  • Cincinnati, OH (9.3%)


New listings fell year over year by the biggest margins in— 

  • Allentown, PA (-55.7%)
  • Greensboro, NC (-51.1%)
  • Boise, ID (-48.8%)

They fell year over year by the smallest margins in— 

  • McAllen, TX (-7.3%)
  • Buffalo, NY (-8.9%)
  • El Paso, TX (-9.4%)


Active listings fell year over year by the biggest margins in— 

  • Allentown (-46%)
  • Greensboro (-38.6%)
  • Cincinnati (-37.6%)

They increased year over year by the biggest margins in— 

  • North Port, FL (50.8%)
  • New Orleans, LA (45.9%)
  • McAllen, TX (40.4%).


In Rochester, NY, 72.7% of the homes purchased in May sold above their final list price—down from 75.8% one year ago (May 2022). That 3.1% decline is the smallest among the metros in Redfin’s analysis, followed by Milwaukee, WI (-3.4 ppts), and Hartford (-4.3 ppts). 

Metros with the biggest annual declines in the percentage of homes selling above the final list price were— 

  • Austin, TX (-48 ppts)
  • Dallas, TX (-40.4 ppts)
  • North Port, FL (-36.9 ppts)

Read the full report for more details. 

Takeaways for real estate agents

As a knowledge broker for your community, it’s up to you to know exactly what conditions buyers and sellers face in your market. 

Be prepared with data like this to prepare buyers for what could be a very competitive home shopping experience, depending on their area and price point. 

As for sellers, use this data to encourage those who want to sell but are worried they won’t be able to get the full list price for their home. While their results also depend, to some extent, on location and price point—as well as on the condition of their home—you can set them up for a better financial future by clearly presenting the pros and cons of selling in today’s market.