Another Redfin report shows an easing up in the U.S. housing market slowdown.
The number of active home listings saw its first decline since the start of the year, falling slightly during the four weeks ending August 14th.
Sellers are backing off in response to cooling buyer demand, which, according to Redfin’s Homebuyer Demand Index, has dropped 14% compared to a year ago.
So, what does this mean for you and your clients?
New listings are down
With fewer homeowners listing their homes, new listings are down 13.6% year over year—the biggest annual drop since June 2020—slowing the recent growth in housing supply.
That growth gave buyers more options and forced more sellers to slash their prices. Now, more sellers are deciding to stay put.
That said, sellers who stay on the market see an advantage to doing so.
Sellers who remain have less competition
With the drop in new listings, sellers face less market competition. And as a growing number start with more realistic listing prices, fewer are having to readjust their expectations.
As a consequence, the percentage of home listings with price reductions—a key indicator of a cooling real estate market—has leveled off at its record high: 7.7% as of August 14th.
Homes are selling more quickly
After months of decline, the percentage of homes with pending sales under contract within one week has leveled off at 25% — down from 31% on August 14th, 2021. The percentage at two weeks leveled off at 37.3% — down from 44% a year earlier.
With some homeowners bowing out of the market, inventory growth has slowed.
That means buyers have fewer homes to choose from and may lose some of their newfound bargaining power, which allows sellers to maintain their list prices instead of having to cut them.
Leading indicators of housing market recovery
A closer look at the usual housing market metrics points to an easing up in the slowdown that has sidelined both buyers and sellers in recent weeks.
- 30-year mortgage rates fell to 5.13% for the week ending August 18—still well over the 3.22% from the start of the year but down from a 2022 high of 5.81%
- Google searches for “homes for sale” dropped 17% the week ending August 13, compared to a year earlier, but are up 16% from late May.
- The Redfin Homebuyer Demand Index (seasonally adjusted), which tracks requests for home tours and other home-buying services from their agents, saw a 14% year-over-year decline during the week ending August 14.
- Home touring activity (also for the week ending August 14) was down 5% from the beginning of 2022, compared to a 14% increase from a year earlier.
- Mortgage purchase applications dropped 18% year over year during the week ending August 12, while the seasonally adjusted index dipped 1% week over week.
Top housing market takeaways
The indicators listed above have had a measurable impact on the housing market, as shown by the following takeaways:
- Median home sale prices, even with the 5.5% decline from June 2022’s record high, are up 7% year-over-year.
- The median listing price of new home listings increased 11% year-over-year to $385,725. Asking prices dropped 4.7% from the record high set during the four weeks ending May 22.
- The monthly mortgage payment on the median-priced home was $2,244 at the current mortgage rate of 5.13%—up 35% from $1,665 the same time last year, when mortgage rates sat at 2.86%.
- That median mortgage payment is down from $2,463—the peak reached during the four weeks ending June 12.
- Pending home sales and new listings are both down from a year earlier. And now active listings have dropped 0.2%—the first decline since the four weeks ending January 30th of this year.
- Homes that sold spent a median of 23 days on the market—up from the record low of 17 days set in May and early June of this year and from 21 days a year earlier.
- 41% of those homes sold above list price—down from 51% a year ago.
- The average sale-to-list-price ratio dropped to 100.3% from 101.6% a year ago, meaning the average home sold for 0.3% above the asking price.
As an agent, you need to keep data relevant to your clients within arm’s reach, so you can easily share it with them when they have questions or express doubts.
Help buyers and sellers see past the headlines to what’s really going on in their local market, so they can make smart decisions, even when conditions aren’t ideal.