BAM Key Details

  • According to a new report from Redfin, there was a 15% decrease in home sales year over year in June, the most significant drop in two years.  
  • New listings fell 30.6%, the lowest and most significant decline recorded since April 2020.
  • Despite low inventory, the median home sales price increased to $426,056—the second-highest price on record. 

Last month, we asked what the housing market will be like for the rest of 2023. Here is what took place in June. 

A record low number of homes for sale, combined with an increase in homebuyer demand, has caused home prices to increase across the U.S.  this month.

According to a new report from Redfin, the median home sales price was $426,056 in June, just 1.5% ($6,341) below the all-time high of $432,397 set in May 2022. 

median sales price

Source: Redfin

The increase in home prices comes despite high mortgage rates, which continue to stay around 7%. 

Today’s housing market is extraordinary; it feels hot even though there are very few homes changing hands. Sellers are getting multiple offers if their home is priced well and in a desirable area even though there aren’t many buyers out there. That’s because house hunters have so few homes to choose from. As they get used to elevated mortgage rates, more buyers are starting to come out of the woodwork, making the market feel even hotter.

Daryl Fairweather

Chief Economist, Redfin

While many housing economists predict mortgage rates will lower by the end of 2023 and throughout 2024, it’s unlikely they’ll come down enough to get a mass rush of listings on the market. After all, 82% of homeowners with mortgages have a rate under 5%, and 62% have rates below 4%.

Home Prices Rise Most in Affordable Markets

Affordable markets are seeing the biggest increase in home prices year over year, according to Redfin’s report.

Rochester, NY,  saw its median home sales price rise to 13.1% to $250,000 in June, followed by Milwaukee, WI (11.6%) and Omaha, NE (10.4%). 

Metros where home prices fell the most year over year include Boise, ID (-10.4%), Austin, TX (-7.8%), and Las Vegas, NV (-7.8%). 

Pending Sales Increase Month over Month

The number of pending sales has continued to rise for three months following a 16-month streak of numbers decreasing. While month over month numbers are up, pending sales decreased 16.2% year over year in June—the smallest annual decline in a year. 

High rates are still giving a lot of buyers pause, but the sticker shock is no longer as severe as it was when rates skyrocketed last year. With home prices back near record highs, buyers are also less worried that they’ll buy a house that’ll plunge in value.

Daryl Fairweather

Chief Economist, Redfin

Housing Inventory: Less to choose From and More to Fight for 

There was a 15% decrease in home sales year over year in June, which is the most significant drop in almost two years. This is largely due to a lack of inventory—new listings fell 30.6% in June. This marks the lowest and most significant decline in new listings since April 2020, when the pandemic shook the housing market. 

new listings

Source: Redfin

There is no urgency for homeowners to sell because this would mean taking on a much higher mortgage rate. Approximately 90% of homeowners with mortgages have interest rates that are below 6%. The average rate for a 30-year-fixed mortgage in June was 6.71%, relatively close to the 20-year peak of 7.08% reached during the fall. 

Because of fewer homes on the market, there are more homebuyer bidding wars in some areas. In Rochester, NY, the typical home is selling for 14.1% more than its asking price–the highest premium among the metros, according to Redfin. 

Final Takeaways

It is difficult for clients to navigate the constantly changing market, so agents need to continuously build trust with them. 

One of the best ways to do this is by asking questions about what they want and getting clear on their motivation for buying or selling. With less activity happening in the market, reaching out to clients and maintaining relationships while we wait for the market to change is essential.