The housing market shows signs of cooling down as mortgage rates continue to tick above 3% for the first time in 10 weeks. The Redfin Homebuyer Demand Index, which measures requests for home tours and other home-buying services, fell below 2020 levels for the first time this year.
Ending on June 18, 2021, mortgage purchase applications increased by 1% week-over-week. As of June 20, home tours were 30% above their level at the beginning of the year compared to a 48% increase at the same point last year.
Additionally, the Mortgage Bankers Association (MBA) home purchase index fell 11% since March 24. As a result of declining sales, the number of actively listed homes for sale has crept up 5% from the 2021 low in mid-March. However, prices are still rising, homes are selling in fewer days, and they’re selling higher and higher above listing price. It will take longer to reflect a slowdown since these are homes that went under contract just a few months ago.
Redfin chief economist, Daryl Fairweather, said, “Some homebuyers are pausing or abandoning their plans to buy because homes in their area have gotten too expensive. Even though there are no signs of prices coming down, homebuyers may face a bit less competition and have a bit more selection of homes this summer than they did earlier this year. All year we've heard stories about homeowners being reluctant to sell because they don't want to face such a tough market as a buyer. As the housing market cools slightly, we may see more homeowners finally decide to cash out and move. And as the economy continues to reopen and employers clarify their work-from-home policies, more homeowners may decide that a move is in order.”
The median home sale price increased 23% from last year to $361,750, a record high. The asking price for homes is up 13% from last year to a median of $362,600. However, the number of new homes listed for sale increased 6% from last year but fell 5% from a three-week mid-March peak in sales. Active listings fell 34% from 2020 but climbed 5% from the three-week low ending on March 14.
Approximately, 41% of homes that went under contract had an accepted offer within one week of hitting the market, up from 32% during the same period a year earlier. Also, 55% of homes that went under contract had an accepted offer within the first two weeks on the market, well above the 44% rate last year.
To view the full report, including charts and graphs, visit Redfin Housing Market Update: Demand Drops Below 2020.
