Home Sales Post Rare May Decline as Mortgage Rates Rise

Rhea-AI Summary

Redfin reported a 3% month-over-month decline in home sales for May, marking the second drop on record outside 2020. Home prices increased by just 1.5%, the smallest May rise since 2012, with median sale prices at $430,600. Mortgage rates reached 5.23%, their highest since 2009, contributing to a tight housing market and decreased inventory. Despite an overall 10.2% decline in year-over-year home sales, existing homeowners hold record high equity. The market is expected to slow further into fall as buyers face reduced competition.

Positive

• Existing homeowners hold record high home equity.
• Homebuyers are experiencing less competition for the first time in two years.

Negative

• Home sales fell by 3% month-over-month, marking a record low for May.
• Home prices saw the smallest May increase on record at only 1.5%.
• Mortgage rates climbed to 5.23%, their highest since 2009.
• Active listings declined year-over-year, leading to a tight housing market.

Redfin reports home sales fell in May for only the second time on record, while home prices saw the smallest May increase on record

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Home prices rose 1.5% month over month in May, their smallest increase of any May in Redfin’s records, which go back to 2012, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

The housing market cooled considerably as mortgage rates climbed to their highest levels since 2009. Seasonally-adjusted home sales fell 3% month over month, their only May decline on record outside of 2020, when the start of the pandemic sent shockwaves through the housing market. Despite this decline in demand, the inventory of homes for sale still fell from a year earlier. As the market remains tight and new listings also decline, May saw the smallest drop in active listings since November 2019.

“The sudden and dramatic surge in mortgage rates has been a shock to the system for housing,” said Redfin chief economist Daryl Fairweather. “With inflation still at 40-year highs, mortgage rates are likely to stay elevated for a while, so the market will have to adjust to this new reality. The good news is that cheap debt is no longer fueling unsustainable home price growth, and existing homeowners are in a good position, holding record high home equity with debt financed at record low mortgage rates. Homebuyers however are facing mortgage rates near 6%, which means the housing-market slowdown will likely continue into the fall, but one silver lining is that homebuyers are facing less competition for the first time in two years.”

May Highlights

Market Summary		May 2022		Month-Over-Month		Year-Over-Year
Median sale price		$430,600		1.5%		14.8%
Homes sold, seasonally-adjusted		556,200		-3.0%		-10.2%
Pending sales, seasonally-adjusted		516,500		0.3%		-9.2%
New listings, seasonally-adjusted		614,200		0.8%		-4.5%
All Homes for sale, seasonally-adjusted		1,372,800		-0.7%		-4.3%
Median days on market		16		-1		0
Months of supply		1.4		0		0.1
Sold above list		59.3%		0.4 pts†		5.8 pts†
Median Off-Market Redfin Estimate		$420,600		1.4%		22.3%
Average Sale-to-list		103.1%		0 pts†		0.9 pts†
Average 30-year fixed mortgage rate		5.23%		+0.25 pts†		+2.27 pts†

† - “pts” = percentage-point change

Metro-Level Highlights

Competition

• Indianapolis was the fastest market, with half of all homes pending sale in just 4 days, the same as a year earlier. Denver, Omaha, NE, Oklahoma City and Portland, OR were the next fastest markets, with 5 median days on market.
• In San Jose, CA, 84.5% of homes sold above list price, more than any other metro Redfin analyzed. Next came 83.6% in Oakland, CA, 79.3% in Worcester, MA, 76.3% in San Francisco, and 76.0% in Rochester, NY.

Prices

• North Port, FL had the nation’s highest price growth, rising 30.5% since last year to $475,000. Tampa, FL came next at 28.1%, followed by Las Vegas (26.8%), Knoxville, TN (25.9%), and Orlando, FL (25.8%).
• No metros saw price declines in May.

Sales

• Honolulu led the nation in year-over-year sales growth, up 5.0%, followed by Denver, up 4.0%. El Paso, TX rounded out the top three, with sales up 3.7%.
• West Palm Beach, FL saw the largest decline in sales since last year, falling 25.5%. Next came Lake County, IL (-22.9%) and Anaheim, CA (-22.4%).

Inventory

• Elgin, IL had the highest increase in the number of homes for sale, up 35% year over year, followed by Chicago (18.9%) and Austin, TX (15.6%).
• Allentown, PA had the largest decrease in overall active listings, falling 46.3% since last May. It was followed by Greensboro, NC (-35.2%), Bridgeport, CT (-31.6%) and Hartford, CT (-29.3%).

Redfin Estimate

• Miami (48.4%) had the largest share of homes predicted to sell for below list price, according to Redfin Estimate data, followed by Baton Rouge, LA (40.6%) and Tulsa, OK (40.0%).
• Sacramento, CA (90.8%) had the largest share of homes predicted to sell at or above list price, followed by Oakland (90.1%) and Worcester (89.6%).

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-market-may-home-sales-decline/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220617005514/en/

Redfin Journalist Services:

Isabelle Novak, 414-861-5861

press@redfin.com

Source: Redfin

FAQ

What was the home sales decline reported by Redfin for May 2022?

Redfin reported a 3% month-over-month decline in home sales for May 2022.

How much did home prices increase in May 2022 according to Redfin?

Home prices increased by just 1.5% in May 2022, the smallest rise for that month since 2012.

What were the mortgage rates in May 2022?

The average mortgage rate reached 5.23% in May 2022, the highest level since 2009.

What is the current status of active home listings as reported by Redfin?

Active listings fell year-over-year, indicating a tight housing market.

What does the decline in home sales signify for Redfin (RDFN) investors?

The decline in home sales could indicate challenges in the housing market, potentially affecting Redfin's financial performance.