Redfin Reports Homes Sales Fell to One of the Lowest Levels on Record in May

Rhea-AI Summary

Redfin's latest report reveals that U.S. home sales fell to one of the lowest levels on record in May 2024, decreasing 1.7% month-over-month and 2.9% year-over-year. The median home sale price, however, reached a record high of $439,716, up 5.1% from the previous year, driven by supply and high demand. Despite fewer homes being sold, new listings rose by 0.3% from the previous month and 8.8% from last year, but active listings remain 25% below pre-pandemic levels. Mortgage rates increased to an average of 7.06%, impacting both buyers and sellers.

Approximately 19.2% of homes for sale experienced price cuts, reflecting overpricing and market saturation, particularly in regions like Florida and Texas. Sales are sluggish as high buying costs deter both buyers and sellers, yet prices continue to soar due to bidding wars in some markets. The housing shortage is easing but still severe, with active listings rising 11.1% year-over-year. Metro-level highlights indicate varying regional impacts on prices, listings, and sales.

Positive

• Median home sale price hit a record high of $439,716, a 5.1% increase year-over-year.
• New listings rose by 0.3% month-over-month and 8.8% year-over-year.
• Active listings increased by 0.4% month-over-month and 11.1% year-over-year, the largest annual gain since early 2023.
• Certain metro areas saw significant rises in median sale prices: Anaheim, CA (17.6%), Cleveland (15.1%), and Nassau County, NY (14.2%).
• Markets like Rochester, NY, with relatively affordable homes, saw near-record-low supply and price increases.
• Closed home sales rose most in San Jose (16.6%), Minneapolis (11.7%), and San Francisco (10.5%).
• 77.1% of homes in Rochester, NY sold above their final list price, the highest share among analyzed metros.

Negative

• Home sales fell 1.7% month-over-month and 2.9% year-over-year to one of the lowest levels on record.
• High mortgage rates averaging 7.06% are deterring both buyers and sellers.
• 19.2% of homes for sale had price cuts, indicating overpricing and market saturation.
• Active listings remain approximately 25% below pre-pandemic levels.
• Metro areas in Florida and Texas, like North Port (51.1%) and Tampa (46%), saw significant increases in active listings, indicating potential overbuilding and increased competition.
• Some regions experienced declines in median sale prices: Cape Coral, FL (-2.7%), Honolulu (-2.1%), and Austin, TX (-1.1%).
• Sales dropped significantly in metro areas like Stockton, CA (-15.4%), Buffalo, NY (-15.3%), and San Antonio (-14.3%).

Insights

Financial Analyst

The latest report from Redfin reveals a mixed picture of the U.S. housing market. The median home sale price hit a record high of $439,716 in May, a 5.1% increase year-over-year. However, home sales dropped by 1.7% month-over-month and 2.9% year-over-year, suggesting a market suffering from high mortgage rates and limited inventory. For potential investors, these mixed signals reveal both opportunities and risks. High home prices coupled with a shrinking number of transactions could mean that while certain areas may still offer profitable investments, the overall market may face headwinds due to high mortgage rates and economic uncertainties.

On the supply side, new listings have increased by 0.3% month-over-month and 8.8% year-over-year, but they remain roughly 20% below pre-pandemic levels. This limited inventory, combined with high demand, is pushing prices higher, yet the sluggish sales indicate potential market resistance. Investors should be cautious, as the high prices and low sales volumes might not be sustainable in the long term, especially if mortgage rates stay elevated.

Market Research Analyst

The housing market data illustrates a paradox: record-high home prices combined with some of the lowest sales volumes in recent memory. One contributing factor is the average 30-year fixed mortgage rate, which rose to 7.06%, a significant increase from last year's rate of 6.43%. For buyers, high mortgage rates translate into higher monthly payments, potentially sidelining many prospective homebuyers. The interplay between high demand and constrained supply is leading to competitive bidding environments in certain markets, driving prices even higher.

Certain geographic areas are particularly noteworthy. For example, North Port, FL, Tampa, and Cape Coral have seen significant increases in active listings, suggesting local market saturations that could lead to price corrections. Conversely, markets like Rochester, NY, which remain relatively affordable, are experiencing near-record-low supplies and higher sales above list price. Investors should consider these local dynamics when evaluating real estate opportunities.

Mortgage Rate Analyst

The data revealed by Redfin underscores the significant impact of mortgage rates on the housing market. The average 30-year fixed mortgage rate reaching 7.06% is more than double the all-time low observed during the pandemic. This sharp increase in borrowing costs is likely contributing to the observed declines in home sales. Potential buyers might find it increasingly difficult to afford homes, leading to fewer transactions and forcing sellers to adjust their expectations.

Interestingly, despite the elevated mortgage rates, median home prices continue to climb, driven by constrained supply and persistent demand. The 19.2% of homes experiencing price drops may indicate a market correction, where overvalued listings adjust to more realistic levels. For investors, the key will be to navigate these mortgage rate pressures and identify markets where demand fundamentals remain robust.

The median U.S. home sale price hit a record high in May as demand continued to outpace supply, with the number of homes for sale roughly 25% below pre-pandemic levels

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Home sales fell 1.7% month over month in May on a seasonally adjusted basis and dropped 2.9% from a year earlier, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. There have been just two months in the past decade with fewer home sales: October 2023, when mortgage rates jumped to a 23-year high, and May 2020, when the onset of the pandemic brought the housing market to a halt and home sales to a record low.

“Buyers today are facing many of the realities of a hot market even though few homes are changing hands,” said Redfin Senior Economist Elijah de la Campa. “Sales are sluggish because high homebuying costs are making both house hunters and prospective sellers skittish. And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs.”

Sales may pick up later this year if mortgage rates slowly tick down as expected.

May 2024 Highlights: United States

	May 2024	Month-over-month change	Year-over-year change
Median sale price	$439,716	1.6%	5.1%
Homes sold, seasonally adjusted	407,959	-1.7%	-2.9%
New listings, seasonally adjusted	527,785	0.3%	8.8%
All homes for sale, seasonally adjusted (active listings)	1,634,420	0.4%	11.1%
Months of supply	2.3	-0.1	0.4
Median days on market	32	-3	0
Share of for-sale homes with a price drop	19.2%	2.4 ppts	6 ppts
Share of homes sold above final list price	35.0%	1.4 ppts	-2.4 ppts
Average sale-to-final-list-price ratio	99.9%	0.2 ppts	-0.1 ppts
Average 30-year fixed mortgage rate	7.06%	0.07 ppts	0.63 ppts
Note: Data is subject to revision

Home Prices Hit Another Record High in May, and Mortgage Rates Kept Climbing

The median home sale price rose 5.1% year over year in May to a record $439,716. The average 30-year-fixed mortgage rate hit 7.06%. That’s up from 6.99% one month earlier and 6.43% one year earlier, and is more than double the all-time low of 2.68% during the pandemic. Daily average mortgage rates did drop to their lowest level in about three months this week after the latest CPI report showed that inflation is continuing to cool.

Even though homes are selling for more than ever before, many sellers are still having to lower their list prices after putting their homes on the market—one silver lining for buyers.

Nearly One of Every Five Homes for Sale Faced a Price Cut

Nearly one in five (19.2%) homes for sale in May had a price cut, up from 13.2% a year earlier and just shy of the 21.7% record high set in October 2022.

Some sellers are reducing their prices because they listed their home for too much initially and it ended up sitting on the market. The typical home for sale in May spent 32 days on the market. While that’s comparable with a year earlier, it’s the highest level for any May since the start of the pandemic.

Price drops are particularly common in areas where housing supply has been rising quickly, like Florida and Texas. In these areas, individual home sellers have been facing strong competition from homebuilders.

The Housing Shortage Is Improving, But Remains Severe

New listings rose 0.3% month over month in May on a seasonally adjusted basis and climbed 8.8% from a year earlier. Still, they were roughly 20% below pre-pandemic (May 2019) levels. That’s largely because many homeowners don’t want to sell, as they feel “locked in” by the low mortgage rate they scored during the pandemic.

Active listings, or the total number of homes for sale, rose 0.4% month over month on a seasonally adjusted basis and jumped 11.1% from a year earlier—the largest annual gain since the start of 2023. Still, active listings were about 25% below pre-pandemic levels.

While new listings represent the number of homes that were listed for sale during a given month, active listings represent the total number of homes that were for sale during a given month. That means that the latter metric includes homes that aren’t selling. One reason active listings have risen so much is that in some areas, homes are lingering on the market and getting stale.

Active listings are also soaring along Florida’s southwest Gulf Coast. In North Port, they surged 51.1% year over year on an unadjusted basis—the largest increase in the nation. Next came Tampa (46%) and Cape Coral (45.1%). Those housing markets are cooling faster than anywhere else in the country amid a new-construction boom, intensifying natural disasters and soaring insurance costs, a separate Redfin report found.

Meanwhile, many of the markets that are holding up best and seeing price increases—like Rochester, NY—are relatively affordable and have near-record-low supply.

Metro-Level Highlights: May 2024

• Prices: Median sale prices rose most from a year earlier in Anaheim, CA (17.6%) Cleveland (15.1%) and Nassau County, NY (14.2%). They fell most in Cape Coral, FL (-2.7%), Honolulu (-2.1%) and Austin, TX (-1.1%).
• Price cuts: In Indianapolis, 48.1% of listings had a price drop—a higher share than any other metro Redfin analyzed. Next came Tampa, FL (45.2%) and Denver (44.8%). The lowest shares were in Newark, NJ (13.4%), Lake County, IL (15%) and Milwaukee (15.2%).
  Note: Three of the 10 metros with the highest shares of price drops are in Florida and three are in Texas.
• New listings: New listings rose most in San Jose, CA (32.7%), Seattle (31.2%) and Denver (31.1%). They fell most in Atlanta (-7.7%), New Orleans (-4.4%) and Greensboro, NC (-4.3%).
• Active listings: Active listings rose most in North Port, FL (51.1%), Tampa (46%) and Cape Coral (45.1%). They fell most in New Brunswick, NJ (-8.1%), Chicago (-7.3%) and Raleigh, NC (-5.5%).
• Closed home sales: Home sales rose most in San Jose (16.6%), Minneapolis (11.7%) and San Francisco (10.5%). They fell most in Stockton, CA (-15.4%), Buffalo, NY (-15.3%) and San Antonio (-14.3%).
• Sold above list price: In Rochester, NY, 77.1% of homes sold above their final list price, the highest share among the metros Redfin analyzed. Next came San Jose (76.1%) and Oakland, CA (68.4%). The shares were lowest in North Port (5.9%), West Palm Beach, FL (8.1%) and Cape Coral (8.6%).

To view the full report, including charts, please visit: https://www.redfin.com/news/home-sales-fall-to-near-record-low

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. 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 have our renovations crew fix it up 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 $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

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/20240614622273/en/

Redfin Journalist Services:

Kenneth Applewhaite

press@redfin.com

Source: Redfin

FAQ

What was the median home sale price in the U.S. in May 2024?

The median home sale price in the U.S. in May 2024 was $439,716, a record high.

How did U.S. home sales perform in May 2024?

U.S. home sales fell 1.7% month-over-month and 2.9% year-over-year in May 2024.

What is the stock symbol for Redfin?

The stock symbol for Redfin is RDFN.

How did mortgage rates impact the U.S. housing market in May 2024?

Mortgage rates averaged 7.06% in May 2024, contributing to sluggish home sales despite high prices.

What percentage of homes for sale had price cuts in May 2024?

In May 2024, 19.2% of homes for sale had price cuts.

Which metro areas saw the highest increase in home sale prices in May 2024?

Anaheim, CA (17.6%), Cleveland (15.1%), and Nassau County, NY (14.2%) saw the highest increases in home sale prices.

What was the year-over-year change in active listings in May 2024?

Active listings increased by 11.1% year-over-year in May 2024.

Which metro area had the highest share of homes sold above list price in May 2024?

Rochester, NY had the highest share of homes sold above list price at 77.1% in May 2024.

How did new listings change in May 2024?

New listings rose 0.3% month-over-month and 8.8% year-over-year in May 2024.