Amidst a Nationwide Inventory Shortage, U.S. Home Prices Hold Steady
The latest data from national property broker Redfin reveals a significant 22.4% decline in new listings of homes for sale nationwide during the four weeks ending April 23, 2023, marking one of the sharpest drops observed since the onset of the pandemic.
Homeowners are opting to stay put, driven by a desire to retain their low mortgage rates, particularly as this week’s average 30-year mortgage rate experienced its second consecutive weekly increase.
Additionally, the challenge of finding another suitable home to purchase further contributes to the reluctance to list properties. Consequently, the scarcity of new listings has triggered an unusual decrease in the overall inventory of homes for sale.
This shortage in inventory has led to a notable trend where homes are selling swiftly. Nearly half of the homes on the market are being snapped up within a mere two weeks, representing the highest proportion witnessed in nearly a year.
Such a surge in demand comes amidst elevated mortgage rates, which have prompted some buyers to adopt a cautious stance, resulting in a 17% decline in pending home sales compared to the previous year.
Despite the competitive market environment, home prices have managed to remain relatively stable. The U.S. median sale price has experienced a modest 2.8% decline year over year, a trend consistent with recent months. However, price fluctuations vary across different regions, with notable declines observed in areas such as Austin, TX (-13.7% YoY), Oakland, CA (-13.5%), and San Francisco (-12.3%).
Redfin’s Deputy Chief Economist, Taylor Marr, attributes the resilience in home prices to the persistent demand outweighing the limited supply. Marr notes that in regions where new listings are particularly scarce, sellers pricing their homes in line with the market are attracting multiple offers, thereby supporting current price levels. Marr also suggests that the sustained high prices could potentially entice more sellers to enter the market in the future.
Redfin agent Heather Mahmood-Corley in Phoenix highlights the intense demand surpassing the available supply in her area, where well-priced homes are receiving multiple offers.
Similarly, in Seattle, despite price and pending sales declines exceeding the national average, agent Shoshana Godwin notes an uptick in demand this month due to limited inventory, advising buyers to act swiftly if they find a suitable home amidst the challenging market conditions.
Key Indicators Reflecting Homebuying Activity:
- Mortgage Rates: During the week ending April 27, the average 30-year fixed mortgage rate saw a slight uptick to 6.43%, marking the second consecutive week of marginal increases following five weeks of declines. On April 27, the daily average reached 6.67%.
- Mortgage Purchase Applications: Mortgage-purchase applications for the week ending April 21 showed a 5% increase from the previous week, adjusted for seasonal variations. However, compared to the same period last year, purchase applications experienced a significant decline of 28%.
- Redfin Homebuyer Demand Index: The seasonally adjusted Redfin Homebuyer Demand Index, which gauges requests for home tours and related services from Redfin agents, demonstrated a slight decrease from the previous week during the week ending April 23. Nevertheless, there was a notable 3% increase from the previous month. However, compared to the same period last year, the index registered a decline of 13%.
- Google Searches: Google searches for “homes for sale” experienced an approximately 8% decrease from the previous month during the week ending April 22. Furthermore, searches were down approximately 20% compared to the same period last year.
- Touring Activity: Touring activity, as reported by home tour technology company ShowingTime, showed a 28% increase from the beginning of the year as of April 22. This represents a notable uptick compared to the 17% increase recorded during the same period last year.
Insights into the Current Housing Market:
As of mid-April 2023, the housing market in the United States is exhibiting several noteworthy trends and developments:
- Median Home Sale Price: The median home sale price stands at $367,053, reflecting a decline of 2.8% compared to the previous year. This marks the ninth consecutive four-week period of decreasing sale prices.
- Regional Variations in Sale Prices: Sale prices have declined in 29 out of the 50 most populous U.S. metros. Notably, Austin, TX, witnessed the largest drop with a decline of 13.7% year over year, followed by Oakland, CA (-13.5%), San Francisco (-12.3%), Anaheim, CA (-10%), and Sacramento, CA (-9.4%). Conversely, Fort Lauderdale, FL, experienced the most significant increase in sale prices, rising by 10% year over year.
- Median Asking Price of Newly Listed Homes: The median asking price of newly listed homes was $394,375, marking a marginal increase of 0.2% year over year.
- Monthly Mortgage Payments: At the current weekly average mortgage rate of 6.43%, the monthly mortgage payment for the median-asking-price home amounts to $2,555. This figure represents an all-time high and reflects a notable increase of 12% ($271) from the previous year.
- Pending Home Sales: Pending home sales have experienced a significant decline of 16.7% year over year. This decrease is observed across all 50 of the most populous U.S. metros, with notable declines in Las Vegas (-39%), Seattle (-38.9%), Portland, OR (-38.7%), Chicago (-36.9%), and Oakland, CA (-36.2%).
- New Listings of Homes for Sale: New listings of homes for sale have decreased by 22.4% year over year. This decline is consistent across all 50 of the most populous U.S. metros, with the most significant drops observed in Oakland (-43.3% YoY), San Diego (-39.8%), Seattle (-39.6%), Sacramento (-39.2%), and Riverside, CA (-38.2%).
- Active Listings: The number of active listings, representing homes listed for sale at any point during the period, has increased by 7.4% from the previous year. However, this marks the smallest increase in nine months and is accompanied by an unseasonal decline in this metric.
- Months of Supply: The months of supply, indicating the balance between supply and demand, currently stands at 2.7 months, up from 1.9 months compared to the previous year. This suggests a shift towards more balanced market conditions.
- Market Dynamics: Nearly half (47%) of homes that went under contract received an accepted offer within the first two weeks on the market, indicating strong demand. However, homes that sold spent a median of 34 days on the market, reflecting an increase from the previous year.
- Price Dynamics: Thirty percent of homes sold above their final list price, marking the highest share in six months. Conversely, the average sale-to-list price ratio has decreased to 99.1%, down from 102.4% a year earlier.
- Price Reductions: On average, 5% of homes for sale each week underwent a price drop, reflecting an increase from the previous year.
Overall, while certain indicators suggest robust demand and limited supply, others point towards pricing adjustments and market dynamics, highlighting the nuanced nature of the current housing landscape.
