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Even with the number of homes for sale slowly growing, the number of pending sales continued to slide as summer commenced, according to Redfin.
“The month of June was a clear turning point in the ultra-hot housing market of 2021,” said Redfin lead economist Taylor Marr. “As home prices continue to set records, some buyers have hit their limit and are stepping back. At the same time, homes are hitting the market at pre-pandemic levels again, which may finally ease competition and bring some sense of balance to the market. The upshot is that fewer bidding wars could actually keep some on-the-fence buyers in the market and lure back some of the homebuying dropouts.”
According to the report, Google trends also showed continuous decline in online house hunting, with searches for “Real Estate” dipping below 2019 levels (-4.5%) for the first time this year. Meanwhile, mortgage purchase applications dropped dramatically week-over-week (-5%) to their lowest level since May 2020, according to the Mortgage Bankers Association home purchase index.
As home prices are still climbing, posting their highest year-over-year gain on record, there is hope in sight with the share of homes for sale with price drops inching above 2020 levels for the first time this year.
Redfin revealed that most measures of early-stage homebuying demand point to further cooling in the housing market over the summer, but the company's Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—rose slightly from the prior week. The company believes that the increase is due to the growing number of homes that are available for tours.