Is this spring's homebuying season canceled?
According to a new Redfin report, the season is off to a sluggish start with pending home sales down in the first week of May compared to the previous week. Compared to last year, the numbers look even worse; pending home sales fell 4.3%, the biggest decline in roughly three months.
Redfin attributes the current housing market slump to high housing costs. The report shows inventory is losing momentum as would-be sellers refuse to forfeit their lower mortgage rates. New listings look better than last year, up 10%, but remained flat from the previous week, which Redfin notes as being significant since listings typically increase during the high-traffic spring season.
Low inventory is keeping home-sale prices elevated, up 4.7% from last year, hitting a record $386,951. That also means the median monthly mortgage payment is sitting at near-record level $2,858, or $26 shy of last month’s all-time high, as recorded by Redfin.
But, Redfin is forecasting sunnier days ahead, reporting that affordability is starting to improve slightly. Daily average mortgage rates have steadily declined since the start of May, and this week’s slightly softer-than-expected inflation report sent rates below 7% for the first time in over five weeks.
Furthermore, 6.3% of home sellers are dropping their price, on average, the highest share in a year and a half, leading Redfin economists to believe price growth may lose momentum soon.
“High prices and rates are challenging, but there are ways for buyers to take advantage of the somewhat slow market,” said Marsha McMahon-Jones, a Redfin Premier agent in Palm Springs, CA. “Sellers know that high mortgage rates mean they should expect negotiations, expect offers to come in under list price, and be ready for some back and forth on things like repairs and closing costs. Buyers may not be able to get a lower mortgage rate, but they’re often getting homes for slightly less than the asking price. It’s also a good time to buy a fixer-upper at a lower price point because those aren’t selling as quickly.”
