Supply of Affordable Homes Posts Record Gain as Mortgage Forbearance Ends

Rhea-AI Summary

In Q3 2021, the supply of America's most affordable homes surged 13% year-over-year as mortgage forbearance programs ended, according to a Redfin report. The affordable price tier saw a 1.6% increase in housing supply, while luxury and expensive segments experienced declines of 21.2% and 17.9%, respectively. Notably, high-end home sales fell for the first time in over a year, with luxury home purchases down 7%. Despite the increase in affordable homes, inventory remains below historic levels. Median sale prices rose across all price tiers, indicating strong buyer demand.

Positive

• Supply of affordable homes surged 13% year-over-year.
• Affordable price tier housing supply increased by 1.6%.
• Median sale prices rose at least 15% year-over-year in every price tier.

Negative

• Luxury home purchases fell 7%, the first decline since Q3 2020.
• High-end home sales fell for the first time in over a year.
• Overall housing supply remains below historic levels.

SEATTLE, Nov. 3, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — The supply of America's most affordable homes for sale jumped a record 13% year over year in the third quarter as mortgage forbearance programs came to an end, prompting many owners of low-cost homes to put their properties on the market, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Redfin's analysis divides all U.S. residential properties into five price tiers—most affordable, affordable, mid-priced, expensive and luxury—based on Redfin Estimates of the homes' market values. When Redfin refers to a "record" in this press release, the record dates back to the year 2013. The data cited covers rolling three month periods, the most recent of which is the three months ending Sept. 30, 2021, or the third quarter.

The supply of homes for sale in the affordable price tier also grew at a record pace, rising 1.6% year over year in the third quarter. Meanwhile, housing supply in the other three segments tumbled, with the number of luxury and expensive homes on the market dropping a record 21.2% and a record 17.9%, respectively.

U.S. Housing Market Summary by Price Tier, Third Quarter 2021
	Most Affordable	Affordable	Mid-Priced	Expensive	Luxury
Number of homes for sale (AKA active listings or supply), YoY change	13%	1.6%	-10.1%	-17.9%	-21.2%
New listings, YoY change	32.3%	16.2%	1.5%	-3.9%	-4.3%
Homes sold, YoY change	18.5%	11.6%	3.9%	-3.4%	-7%
Median sale price	$126,500	$210,000	$300,000	$460,000	$990,000
Median sale price, YoY change	17.1%	16.7%	17.6%	15.9%	17.2%
Median days on market	24 (-13 days YoY)	18 (-11 days YoY)	16 (-12 days YoY)	19 (-17 days YoY)	30 (-30 days YoY)

"The end of forbearance has forced many lower-income Americans to put their homes up for sale and become renters," said Redfin Chief Economist Daryl Fairweather. "This has caused the number of affordable homes on the market to surge, helping replenish inventory amid an acute housing shortage. It's a rain storm after a long drought, but the drought isn't over yet."

Housing supply in both the most affordable and affordable price tiers remains below historic levels despite the recent record increase. There were 78,000 active listings in the most affordable tier during the third quarter, compared with more than 100,000 during each of the same periods from 2013 through 2016. In the luxury price tier, there were 158,000 active listings in the third quarter, the fourth-lowest level on record.

"The luxury market remains strong, but is past its pandemic peak," Fairweather said. "Now that life is somewhat back to normal and travel restrictions have been lifted, many affluent Americans are opting to spend their money on things other than housing."

High-End Home Sales Fall for First Time in Over a Year
Purchases of luxury homes fell 7% year over year in the third quarter and purchases of expensive homes slid 3.4%—the first declines since the three months ending July 31, 2020. The remaining three price tiers posted growth, albeit slower growth than earlier in 2021, as the overall housing market cooled from its pandemic peak.

The lack of high-end housing inventory is one factor restricting sales in that segment of the market. Luxury-home purchases are also likely returning to more normal levels following an outsized surge in the third quarter of 2020 that was fueled by wealthy remote workers looking to escape major cities, Fairweather added.

Homes Across All Price Tiers Continue to Sell Faster and For More Money Than a Year Ago
While the ongoing housing shortage is limiting home sales, strong price growth and market speed indicate that buyer demand remains strong across the board.

Median sale prices climbed at least 15% year over year in every price tier during the third quarter, with the mid-priced segment seeing record growth and the affordable segment seeing near-record growth.

Homes also continued to sell at a much faster pace than last year in the third quarter. The typical luxury home for sale spent 30 days on the market—30 fewer days than the same period a year earlier. The other four price tiers also saw year-over-year increases in market speed.

A recent Redfin report found that one-third of all homes that sold during the four weeks ending Oct. 24 went under contract within seven days of hitting the market, indicating that the market has continued to speed up in the fourth quarter at a time of year when it typically slows down.

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/real-estate-price-tier-report-q3-2021

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.

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SOURCE Redfin

FAQ

What did the Redfin report say about affordable home supply in Q3 2021?

The report indicated that the supply of America's most affordable homes jumped 13% year-over-year.

How did luxury home sales perform in Q3 2021 according to RDFN?

Luxury home purchases fell 7% year-over-year, marking the first drop since Q3 2020.

What is the trend in median sale prices for homes according to the Redfin report?

Median sale prices increased by at least 15% year-over-year across all price tiers.

What was the increase in supply for affordable homes compared to other price tiers in Q3 2021?

The affordable tier grew by 1.6%, while luxury and expensive home supplies decreased by 21.2% and 17.9%.

What does the Redfin report suggest about buyer demand in Q3 2021?

The report suggests that buyer demand remains strong across all price tiers, despite an ongoing housing shortage.