The Intense Home Sales Market Appears to Be Slowing

The housing market may be finally slowing down, according to new data from Redfin.

Redfin is reporting a four-week decline in pending sales and a drop in its demand index, which is down 12% from its late-March peak. Still, pending home sales were up 29% year over year. But seasonally adjusted pending sales are down 9.7% from their peak four weeks ago, which Redfin attributes to people opting to pause their home search and take advantage of the holiday weekend.

Mortgage purchase applications have been falling since late March, according to Redfin. They increased 0.3% week over week (seasonally adjusted) during the week ending June 4. Despite low mortgage rates and easing access to credit, they are now 7% below their average levels in January and February 2020.

Only 35% of consumers said it is a good time to buy a home in May, according to Fannie Mae’s homebuying sentiment index. In April, that number was 47%, and in May 2020, it was 52%.

Rising home prices may be one reason more people think it isn’t a good time to buy a home. In the four weeks ending June 6, the median home-sale price increased 24% year over year to a record-high $358,749, while asking prices of newly listed homes also hit a new all-time high of $364,725. That was a 14% increase the same time a year ago.

More than half, 53%, of homes sold above their listing price, a record number and up from 25% a year earlier. The ratio measuring how close homes are selling to their asking prices increased to 102.1%. The mark is both 3.7 percentage points higher than a year earlier and an all-time high.

While new listings of homes rose 9% year-over-year, active listings fell 37% from 2020 and have been relatively flat since late February, according to Redfin.

When homes hit the market, they’re still moving fast. Fifty-six percent of homes that went under contract had an accepted offer within the first two weeks on the market, which is above the 43% rate during the same period a year ago. Forty-three percent of homes that went under contract had an accepted offer within one week of hitting the market, increasing from 31% during the same period a year earlier.

“Buyers have faced a tough market this year and fewer feel it is a good time to buy as the allure of low rates has waned, so some are choosing to wait it out for now,” said Redfin Lead Economist Taylor Marr. “With demand stabilizing, the housing market should become more balanced, allowing homebuyers to have a less stressful and challenging time finding and competing for a home.”

Earlier Redfin reports also pointed to a slowing market. Over a four-week period ending May 2, home sales fell 3%. In the subsequent four-week period ending May 28, housing prices also fell $2,500 to a median of $354,975. 

New home listings also fell. From the four-week period ending May 2, new home listings decreased 8% from the same time in 2019 and 37% from the same period in 2021. Overall, houses are staying on the market longer and past bid-review dates and homes are either getting fewer offers than in the spring or in some cases only a single offer, according to Seattle Redfin real estate agent Alysan Long.