Housing supply is finally starting to tick up as homes linger on the market. The total number of homes for sale increased 15% year-over-year during the four weeks ended Dec, 4, the biggest uptick since at least 2015, according to a new report from Redfin.
Buyers and sellers have entered a stalemate. New listings fell by more than 20%, which means homes are sitting on the market as prospective buyers stay on the sidelines and wait for mortgage rates and home prices to decline from their peaks.
That’s also evidenced by a slowing market: The typical home was on the market for 37 days, up from a record low of 17 days in June and from 28 days a year earlier. This marks the biggest year-over-year slowdown on record. Only 30% of homes sold within two weeks, the lowest share since January 2020.
The market, though, may not stay calm for very long. Redfin’s Homebuyer Demand Index is rebounding from its low point, up 5% from a week earlier as mortgage rates continue to decline from their early-November peak. Rates dropped to 6.33% from 6.5% a week earlier, according to the Mortgage Bankers Association, cutting the typical homebuyer’s monthly housing bill by about $50.
“This week has been relatively calm and quiet as we approach the end of one of the most volatile years in housing history,” said Redfin Deputy Chief Economist Taylor Marr. “But it’s not over yet. Next Tuesday’s inflation report is the 500-pound gorilla in the room, and the Fed’s press conference the next day will bring us much more clarity on how soon and how quickly we can expect mortgage rates to come down in the new year. Since we expect only a small decline in prices next year, mortgage rates will dictate housing affordability, and as a result, demand and sales, in 2023. If rates continue declining, more buyers may wade back into the market, as they’ll have lower monthly payments.”
Where Prices Are Falling
Home-sale prices fell from last year in 11 of the 50 most populated U.S. metros, six of which are in California. Prices fell 7.8% year-over-year in San Francisco; 3.6% in San Jose; 2.2% in Los Angeles; 1.4% in Detroit; 1.2% in Sacramento; and 1.1% in Pittsburgh. They declined less than 1% in Oakland, Anaheim, Austin, Texas., Philadelphia, and Phoenix.
Indicators of Homebuying Activity
- For the week ended Dec. 8, 30-year mortgage rates ticked down to 6.33%, the fourth straight weekly decrease.
- Mortgage purchase applications during the week ended Dec. 2 declined 3% from a week earlier.
- Fewer people searched for “homes for sale” on Google than this time in 2021.
- Touring activity as of December 4 was down 37% from the start of the year, compared to a 12% decrease at the same time last year.
Housing Market Takeaways
The median home sale price was $355,500 for the four-week period ended Dec. 4, up slightly from the week before and up 1.9% year-over-year. This marks the slowest price growth since June 2020. The median asking price of newly listed homes was $357,470, up 4.4% year over year — still the slowest growth rate since May 2020.
The monthly mortgage payment on the median-asking-price home was $2,297 at the current 6.33% mortgage rate. That’s down slightly from a week earlier and down more than $200 from a month earlier, when mortgage rates were around 7%. Still, monthly mortgage payments are up 38% from a year ago.
Pending home sales were down 34.9% year over year, one of the largest declines since at least January 2015. In the 50 most populated metros, pending home sales fell the most from last year in Las Vegas (-65.4%), Austin (-60.7%), Phoenix (-56.8%), Jacksonville, Fla. (-55.6%), and Portland, Ore. (-53.5%).
The housing inventory had 3.9-month supply, which is flat from a week earlier but up sharply from 3.4 months two weeks earlier.
Only 25% of homes sold above their final list price, down from 42% a year earlier and the lowest level since June 2020. The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, fell to 98.4% from 100.3% a year earlier.
