BAM Key Details: 

  • A new Redfin report shows a 4.1% annual drop in the median home sale price for April, falling from $425,634 to $408,031. 
  • Texas markets are holding up relatively well, while pricey California metros and pandemic hotspots like Boise and Salt Lake City are seeing the biggest annual declines. 

A new report from Redfin shows the median home sale price dropping 4.1% ($17,603) year over year in April—the biggest recorded annual drop in dollar terms and the steepest annual decline in percentage terms since January 2012. 

Marking the third straight month of annual declines, after about a decade of increases, April brought the median home sale price down to $408,031—down from $425,634 in April 2022. 

Elevated mortgage rates are one factor driving down the median home price as many buyers are priced out of the market. Another is that home prices one year ago were close to their all-time high. April 2022’s median was just a little under the record $432,109 median value set the following month. 

Like NAR, Redfin uses median home price trends as a key housing market indicator. But as KCM founder Steve Harney points out, those numbers have limited value in today’s market. 

Redfin-Biggest-drop-in-median-sale-price-chart

Source: Redfin

Pricey California metros and pandemic boomtowns

The biggest annual drops in median home prices were in pricey California markets and pandemic hotspots. Prices in these markets skyrocketed during the pandemic to unsustainable levels and are slowly coming back down. 

The five U.S. metro areas with the steepest annual declines in median home prices: 

  • Oakland, CA (-16.1% or $174,500 YoY)
  • Austin, TX (-15.3% or $85,000)
  • Boise, ID (-15.1% or $80,000)
  • San Francisco (-13.4% or $220,000)
  • Salt Lake City (-10.9% or $60,000)

In April, four of these metros saw record declines in percentage terms. Boise, the outlier, posted its second-biggest decline on record (with the biggest in March). Redfin’s records go back to 2012. 

This seems like a good place to share a recent tweet from KCM founder Steve Harney, in response to the Redfin report, explaining why median home prices are not a reliable indicator of either nationwide or local home price trends.

New listings at second lowest level since 2012

Elevated mortgage rates are driving both buyers and sellers out of the market. New listings for April fell 26.1% year over year on a seasonally adjusted basis as homeowners locked into lower rates remained on the sidelines. 

That drop is the second largest on record—the largest being in April 2020, when the start of the pandemic put the market (temporarily) on ice. 

Redfin-New-Listings-April-2023-chart

Source: Redfin

Elevated mortgage rates are preventing would-be buyers from buying and would-be sellers from selling. And because sellers aren’t selling, the buyers who are out there have very limited options. Home prices are faltering due to sluggish homebuyer demand, but the shortage of homes for sale is preventing them from falling as much as they did in the Great Recession. In some places, there are so few listings that prices are actually rising as a limited pool of buyers competes for an even more limited pool of homes.

Daryl Fairweather

Redfin Chief Economist

Pending home sales dropped a seasonally-adjusted 21% year over year in April, down from the record 36.1% decline in the fall of 2022. Pending sales increased 3.1% from March, marking the first monthly increase since December and the steepest increase since September 2021. 

Redfin-pending-sales-April-2023-chart

Source: Redfin

Lack of homes drives up competition

Despite the slower housing market and high mortgage rates, sellers of well-priced homes can expect to sell quickly and attract multiple offers—because buyers have so few to choose from.

In April, nearly half (47.8%) of the homes that went under contract did so within two weeks of being listed—down 58.4% from one year ago but higher than any April before the pandemic. 

Buyers are also making offers over the asking price to compete. Roughly one-third (33.6%) of homes sold in April sold for more than the final list price. While that’s down from 58.7% one year ago, it’s higher than any April before the pandemic. 

About half of the offers submitted by Redfin agents met with competition. That’s down from 59.2% one year ago but it’s been holding steady around 45% for the last six months, despite the slowing market. 

One Redfin Premier agent serving Los Angeles, Costanza Genoese-Zerbi, reported getting multiple offers and selling homes within a week because of the shortage of inventory. One condo, in particular—with no laundry, no parking, and no air conditioning (in Los Angeles)—drew six offers and sold for $40,000 over the $380,000 asking price. 

Redfin-bidding-wars-April-2023-chart

Source: Redfin

Texas markets are holding up relatively well

In every other major metro area in Redfin’s analysis, pending home sales declined. But five of the ten U.S. metros with the smallest drops in median home prices are in Texas

Top 10 metros with the smallest annual declines in pending sales: 

  1. Fort Worth, TX (-0.8%)
  2. Dallas, TX (-1.9%)
  3. North Port, FL (-5.2%)
  4. Atlanta, GA (-7.4%)
  5. Detroit, MI (-8.7%)
  6. Indianapolis, IN (-11%)
  7. McAllen, TX (-11.1%)
  8. Tampa, FL (-11.3%)
  9. San Antonio, TX (-12.9%)
  10. El Paso, TX (-13%) 

Those five Texas metros also made the top ten list of markets with the smallest declines in new listings, along with Austin. Part of the reason for pending sales holding up relatively well is the less severe shortage of housing supply, thanks to a thriving construction sector. 

Top 10 metros with the smallest declines in new listings: 

  1. El Paso, TX (-0.2%)
  2. McAllen, TX (-1.5%)
  3. Nashville, TN (-7.4%)
  4. North Port, FL (-13.5%)
  5. Fort Worth, TX (-16%)
  6. San Antonio, TX (-17.4%)
  7. Austin, TX (-17.4%)
  8. Memphis, TN (-18.2%)
  9. Dallas, TX (-18.8%)
  10. Pittsburgh, PA (-19%)

Home builders in Texas have been active, which is partly why inventory has been holding up relatively well. Homebuilders are less impacted by higher mortgage rates when selling homes because, unlike many prospective sellers, they’re not sitting on 2-5% rates. 

Mortgage rates aren’t the only rates climbing to uncomfortable heights; interest rates across the board have risen, driving up the cost of borrowing money, which does impact builders. 

Despite that, Texas issued 263,000 building permits last year—leading every other state and well over Florida, which comes next in line with 212,000. 

Home construction in the Fort Worth area is booming, with homes coming on the market all over and at various price points. But prices are still not low enough for many—especially first-time buyers—thanks to higher mortgage rates and property values. 

Metro-level key housing market indicators

Here are the latest metro-level numbers for the following key market indicators: 

Pending sales

Biggest annual declines in pending sales:

  1. Boise, ID (-70.8%)
  2. Baton Rouge, LA (-61.7%)
  3. Greensboro, NC (-56.2%)
  4. Allentown, PA (-54.7%)
  5. Honolulu, HI (-53.9%)

Smallest annual declines in pending sales:

  1. Fort Worth, TX (-0.8%)
  2. Dallas, TX (-1.9%)
  3. North Port, FL (-5.2%)
  4. Atlanta, GA (-7.4%)
  5. Detroit, MI (-8.7%)

Closed sales

Biggest annual declines in closed sales: 

  1. San Jose, CA (-48.2% year over year)
  2. San Francisco, CA (-44%)
  3. Stockton, CA (-43%)
  4. Oakland, CA (-42.8%) 
  5. Sacramento, CA (-42.2%)

Smallest annual declines in closed sales:

  1. North Port, FL (-8.4%)
  2. Fort Worth, TX (-10.6%)
  3. Dallas, TX (-10.7%)
  4. Tampa, FL (-12.8%)
  5. Dayton, OH (-13.7%)

Median sale prices

Biggest annual declines in median sale prices:

  1. Oakland, CA (-16.1%)
  2. Austin, TX (-15.3%)
  3. Boise, ID (-15.1%)
  4. San Francisco, CA (-13.4%)
  5. Salt Lake City, UT (-10.9%)

Biggest annual increases in median sale prices:

  1. Fort Lauderdale, FL (10.7%)
  2. Allentown, PA (8.9%)
  3. Milwaukee, WI (8.9%)
  4. Cincinnati, OH (8%)
  5. St. Louis, MO (7.8%)

New Listings

Biggest annual drops in new listings:

  1. Allentown, PA (-57.9%)
  2. Boise, ID (-50.2%)
  3. Greensboro, NC (-50.1%)
  4. Tacoma, WA (-46.9%)
  5. San Diego, CA (-44.1%)

Smallest annual drops in new listings: 

  1. El Paso, TX (-0.2%)
  2. McAllen, TX (-1.5%)
  3. Nashville, TN (-7.4%)
  4. North Port, FL (-13.5%)
  5. Fort Worth, TX (-16%)

Active listings

Biggest annual drops in active listings:

  1. Allentown, PA (-43.2%)
  2. Cincinnati, OH (-40.3%)
  3. Greensboro, NC (-37.7%)
  4. Lake County, IL (-33.4%)
  5. Oakland, CA (-28.7%)

Biggest annual increases in active listings:

  1. North Port, FL (75.4%)
  2. Nashville, TN (49.2%)
  3. Austin, TX (48.7%)
  4. New Orleans, LA (46.2%)
  5. Cape Coral, FL (46.1%)

Competition

Biggest annual declines in the share of home offers (from Redfin agents) facing competition

  1. Colorado Springs, CO (40.6 percentage point decline: from 62.8% to 22.2%) 
  2. Austin, TX (-36.2 ppts)
  3. Nashville, TN (-33.4 ppts)
  4. Tampa, FL (-32.4 ppts)
  5. Charlotte, NC (-31.4 ppts)

Biggest annual upticks in the share of home offers facing competition:

  1. San Francisco, CA (9.2 ppts)
  2. Worcester, MA (8.4 ppts)
  3. Providence, RI (4 ppts)

Read the full report for more details. 

Takeaways for real estate agents

While Redfin’s report does supply helpful information about the current market, you, as a knowledge broker for your community, need to know your local market better than most—and to articulate meaningful changes with clarity and simplicity. 

Be the antidote to all the misleading headlines out there and keep your clients and prospects up to date with any changes that could impact or interest them. 

And don’t forget to provide helpful visuals to illustrate local and nationwide trends. Tune in Monday through Friday to the Hot Sheet and sign up for BAMx to get access to daily charts, graphs, and slides shared on the show. Use the code HOT to get 10% off your subscription here