It Takes Just 15 Day to Sell a Home, But How Long Will That Last?

Homes continue to sell quickly as the shrinking pool of buyers rushes to beat rapidly rising mortgage rates, according to real estate brokerage Redfin.

Just 15 days on average was needed for the typical home to sell—the fastest pace on record—for the four-week period ending May 8.

“Homebuyers who remain are facing stiff competition, especially for the most desirable homes,” Redfin chief economist Daryl Fairweather said in prepared remarks. “Given the lack of homes for sale, it would take a much larger drop in demand for buyers to really feel like the market has truly turned in their favor.”

Mortgage Rate Hikes ‘Blow Past Expectations’

Zillow senior economist Jeff Tucker tells GlobeSt.com that higher mortgage rates were anticipated this year, but how quickly they’ve risen “has blown past expectations. There will be a point when the cost of buying a home deters enough buyers to bring price growth back down to Earth, but so far has kept the pedal to the metal.”

Home value growth continues to set records, up more than 20% in the past year, Tucker said, and nearly half of homes are selling above their list price across the country.

“It may very well be that those bidding wars include fewer entries than would have been expected last year as some home shoppers pull back, but current buyers won’t likely feel much of an impact yet,” he said.

Economic Conditions Pushing Buyers Away

Seth Bellas, branch manager at Churchill Mortgage, tells GlobeSt.com that the combination of increased rates and home values, inflation and the cost of common goods is pushing more and more buyers out of the marketplace.

A recent Gallup poll showed that 30% of US adults think that now is a good time to buy a home, Bellas said, a rate that dropped 23% from a year ago and marking the first time since the poll began in 1978 that the percentage fell below 50%.

“Even though most consumers believe housing is a good long-term investment, many people are hesitant to move with talks of a recession looming,” Bellas said. “Plus, if you have a rate in the high 2s or low 3s and you are looking to buy a more expensive home, the sticker shock of the higher rate is causing many to stay where they are until rates come back down.”

Jonathan J. Miller, a member of the The Counselors of Real Estate global organization, tells GlobeSt.com that the collapse of housing inventory has been the key driver of the decline in sales. 

“Going from 20 buyers competing for a listing to eight buyers won’t alleviate the surge in price growth,” Miller said.

Flood of Millennial Buyers ‘Unrealized’

Mike Hardy, managing partner of California and Nevada, Churchill Mortgage, tells GlobeSt.com that there’s an affordability issue for first time buyers, “but when we look at the demographics, there is actually a YoY increase in buyers flooding the marketplace that the current market has not realized yet.

“We will have three more years where each year there are Millennials that are at the typical buying age and are entering the marketplace where they weren’t prior,” Hardy said. “There is a reduction in buyers from an affordability standpoint, but all that will do will slow some of the appreciation in real estate. 

“On the front end, there might be a reduction in those that can afford this, but that’s temporary. There’s significant wage inflation taking place and that can take some time to be renegotiated. That will help with affordability a year from now.”

Sale Price Drops Rise, Showings Flat

The share of homes for sale with price drops spiked to a seven-month high of 16% during the four-week period and early-stage homebuying demand fell at the largest annual decline since April 2020 to 7%.

Mike Lane, general manager, Showing Time, tells GlobeSt.com that the number of showings per active listing has remained largely unchanged, on average, across the country and in major metropolitan areas, remaining at the extremely high levels we saw for the first time in the spring of 2021.”

The decline has a broad base, Lane said. The number of showings per listing have declined in the West, for example, but have increased in the Midwest year over year. The number of listings has also declined, so across the board total showings are down about 12%.