Redfin Reports Homebuyers Regain Some Control as Supply Grows and Demand Pulls Back

Rhea-AI Summary

According to a new report from Redfin, the housing market is undergoing a significant shift as homebuyers regain some control due to rising mortgage rates and high home prices. In May, pending home sales saw the largest annual decline since spring 2020, and more than one in five sellers reduced their prices—the highest rate since October 2019. While the median home sale price reached a record $400,999, mortgage rates stabilized around 5.09%. The Redfin Homebuyer Demand Index also fell 9% year over year, reflecting a decrease in buyer activity and home touring.

Positive

• Median home sale price reached a record $400,999, up 16% year over year.
• 53% of homes sold within two weeks, reflecting a competitive market.
• Record 57% of homes sold above list price, indicating strong demand.

Negative

• Pending home sales down 8% year over year, the largest decrease since May 2020.
• Redfin Homebuyer Demand Index declined 9% year over year, marking the seventh consecutive drop.
• 30-year mortgage rates at 5.09%, contributing to decreased buyer activity.

More than one in five home sellers dropped their price while several measures of homebuyer demand posted largest declines since spring 2020

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) —May marked a turning point in the pandemic housing frenzy, as buyers regained some control over the market, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. This limited sense of control comes at a great cost, as 5% mortgage rates and record-high prices have edged many buyers out of the market.

Pending sales posted their largest annual decline since spring 2020, while the Redfin Homebuyer Demand Index declined 9% during the four weeks ending May 29. The number of homes for sale climbed to a new high for this year, posting its smallest decline since April 2020. A growing share of sellers are recognizing the new limits to their power. More than one in five dropped their price, the highest rate since October 2019.

“The sudden surge in mortgage rates led to a sudden and significant cooldown in the housing market in May,” said Redfin Economics Research Lead Chen Zhao. “However, mortgage rates are now stabilizing and homes remain in short supply, so while we do expect home-price growth rates to decline, we don’t expect prices to fall much at the national level. For homebuyers trying to determine the best timing this year, the main benefit of waiting is that there may be less competition as supply starts to build up.”

Leading indicators of homebuying activity:

• Fewer people searched for “homes for sale” on Google—searches during the week ending May 21 were down 10% from a year earlier.
• The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 9% year over year during the week ending May 29. This was the seventh consecutive decline in the index.
• Touring activity from the first week of January through May 29 was 27 percentage points behind the same period in 2021, according to home tour technology company ShowingTime. Touring activity was lower than the first week of January for the first time this year.
• Mortgage purchase applications were down 14% from a year earlier, while the seasonally-adjusted index was down 1% week over week during the week ending May 27.
• For the week ending June 2, 30-year mortgage rates decreased slightly to 5.09%.

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, this data covers the four-week period ending May 29. Redfin’s weekly housing market data goes back through 2015.

• The median home sale price was up 16% year over year to a record $400,999.
• The median asking price of newly listed homes increased 17% year over year to $412,450.
• The monthly mortgage payment on the median asking price home declined slightly to $2,391 at the current 5.09% mortgage rate. This was up 40% from $1,710 a year earlier, when mortgage rates were 2.99%.
• Pending home sales were down 8% year over year, the largest decrease since May 2020.
• New listings of homes for sale were flat from a year earlier.
• Active listings (the number of homes listed for sale at any point during the period) fell 10% year over year—the smallest decline since April 2020.
• 54% of homes that went under contract had an accepted offer within the first two weeks on the market, up from 53% a year earlier.
• 39% of homes that went under contract had an accepted offer within one week of hitting the market, flat compared to a year earlier.
• Homes that sold were on the market for a record-low median of 15 days, down from 19 days a year earlier.
• A record 57% of homes sold above list price, up from 51% a year earlier.
• On average, 5% of homes for sale each week had a price drop. Overall, 20.1% dropped their price in the past four weeks, up from 13.8% a month earlier and 10.1% a year ago. This was the highest share since October 2019.
• The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, was flat at an all-time high of 102.8%. In other words, the average home sold for 2.8% above its asking price. This was up from 101.8% a year earlier.

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-market-update-homebuyers-gain-some-control/

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/20220602005905/en/

Contact Redfin

Redfin Journalist Services:

Kenneth Applewhaite, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What does the May housing market report from Redfin indicate about home prices?

The report shows that the median home sale price increased to a record $400,999, up 16% year over year.

How did pending home sales perform in May according to Redfin?

Pending home sales experienced an 8% decline year over year, marking the largest decrease since May 2020.

What happened to homebuyer demand in May?

The Redfin Homebuyer Demand Index dropped by 9% year over year, indicating a significant decrease in buyer activity.

What percentage of home sellers dropped their prices in May 2023?

More than one in five home sellers, or 20.1%, dropped their prices in May, the highest rate since October 2019.

What mortgage rate stabilization occurred in early June according to Redfin?

As of the week ending June 2, 30-year mortgage rates slightly decreased to 5.09%.