A new Redfin report reveals that the housing market’s supply side is slowly rebuilding as more homes for sale become available and pending sales continue a steady decline. As this trend continues over the next few weeks, prices will stop rising as rapidly and homes for sale will experience price drops.
In July, the median home sale price was $364,160, a record high and 20% increase from last year. The asking price for newly listed homes in July was 12% higher than the same period last year at $360,975. However, asking prices have been basically flat since May.
The average sale-to-list price ratio decreased less than a tenth of a percentage point from peaking in July to 103.3%, meaning the average home sold for 2.3% above asking price, which is 3.5 percentage points higher than a year earlier.
Pending home sales increased 9% year-over-year, which is the smallest increase since late June in 2020. However, pending sales decreased 11% since peaking in May 2021, and are down 4% from the same period in 2019.
The number of new homes being listed is in a typical seasonal decline, down 8% from the 2021 peak in May and down 12% from the same period in 2019. Overall, new listings were up 2% this year compared to last year.
Redfin chief economist, Daryl Fairweather, said, “Just as buyers are pulling back, more listings are hitting the market. I'm optimistic this will create conditions for a little bit of rain in this inventory drought. A homeowner who is thinking of selling to buy again is going to have a much easier time now than they would have back in March. That's because it's becoming less competitive to buy and it is still a historically good time to sell.”
Active listings fell 29% from 2020, which is the smallest decline since January 17, and climbed 10% from the 2021 low in March. Homes that sold were on the market for a median of 15.2 days, down 37 days from last year but a slight improvement from 15 days last month.
Nearly 52% of homes that went under contract had accepted an offer within the first two weeks. That is well above the 44% rate during the same period last year, but down five percentage points from this year’s high point in March.
Moreover, 38% of contracts accepted an offer within one week of hitting the market, up 32% from a year earlier but down 5.5 percentage points from the high point of the year in March.
The share of homes with price drops increased to 4.3%, surpassing 2020 levels and heading towards 2019 levels.
Additionally, mortgage purchase applications decreased 6% from the previous week on July 16. For the week ending on July 22, 30-year-mortgage rates fell to 2.78%, which is the lowest level since February.
Home tours went up between January 1 and July 18, 2021, compared to a 48% increase ove the same period last year. The seasonally adjusted Redfin Homebuyer Demand Index dipped slightly during the week ending on July 18, but increased 16% from a year earlier.
Price drops have become more common in Phoenix, Austin and Bend, OR where prices rose the quickest due to an influx of Californian migrants during the pandemic.
Although the share of homes with price drops increases, the prices of homes continue to rise. This is mainly due to falling mortgage rates, such as the 2.78% rate in February of this year, driving up homebuyer demand.
To view the full report, including charts and methodology, please visit Redfin's Market Insights.
