A record share of home sellers have dropped prices, but buyers are still struggling, Redfin says
Zillow’s stock falls 9% amid ‘uncertain’ housing market forecast
The latest pulse reading on the U.S. housing market shows signs of a shift — but still little price relief for buyers.
The number of home sellers who dropped their asking price shot up to a six-month high of 15% during a four-week period ending on May 1 — up from 9% a year earlier, according to Redfin’s latest report released Friday.
That’s the largest annual gain on record in Redfin’s weekly housing data, tracked through 2015.
But that doesn’t mean homebuyers are seeing much relief as the U.S. housing market continues to see record home prices.
Why prices are still high: Supply continues to lag far behind demand as buyers continue to outnumber sellers, so “the typical home flies off the market at the fastest pace on record and for more than its asking price,” Redfin reported.
“Homebuyers continue to be squeezed in nearly every way possible, which is causing some to take a step back from the market,” Redfin Chief Economist Daryl Fairweather said in a statement issued Friday.
“Unfortunately for buyers hoping to find a deal as competition cools, sellers are pulling back even faster, which is keeping the market deep in sellers’ territory,” Fairweather said. “So even though price drops are becoming more common, most homes are still selling above asking price and in record time.”
By the numbers: The median home sale price was up 17% year over year in the four-week period ending in May — the biggest increase since August — to a record $396,125, Redfin reported.
- As for median asking price of newly listed homes, that’s up 16% year over year to $408,458, which is a new all-time high, according to Redfin’s data.
Meanwhile, pending home sales were down 4% year over year, which is the largest decrease since mid-February. And new listings of homes for sale were down 6% year over year, and have stayed down since mid-March.
- Active listings, or the number of homes listed for sale at any point during the four-week period ending May 1, fell 18% year over year — even though spring is supposed to be the busiest time for home buying.
Homes continue to fly off market at an astonishing pace. Forty-two percent of homes that went under contract during the same time period had an offer accepted within one week of hitting the market. Fifty-six percent had an offer accepted within the first two weeks.
And a majority of homes listed are selling above list price. A record 56% of homes sold above asking price during the four-week period ending May 1, up from 47% a year earlier, Redfin says.
Mortgage impact: The monthly mortgage payment on the median asking price home also rose to a record high: $2,404 at the current 5.27% mortgage rate, Redfin says. That’s up 42% — also an all-time high — from $1,688 a year earlier, when mortgage rates were below 3%.
Housing 2022 forecast: National economists are warning of an “uncertain” time facing the housing market.
This week, the National Association of Realtors’ chief economist, Lawrence Yun, said record-low inventory, unyielding inflation and pressure from the Federal Reserve’s interest rate hikes are throwing “curveballs” for the market.
However, interest rate increases haven’t tempered the cost of housing as low inventory continues to push prices up amid persistent demand. Purchasing a home today is now 55% more expensive than it was just a year ago, according to the National Association of Realtors’ calculations.
Zillow stock falls: As mortgage rates surge and the housing market cools, Zillow’s stock fell 9% this week. The online real estate giant is expecting softer than expected revenues as mortgage rates slow down the housing market.
However, Zillow executives also note the housing market is facing a landscape of uncertainty.
“With forecasts varying widely, one thing that is clear about the 2022 housing market is that the path ahead is uncertain.” Zillow said in a letter to shareholders, TheStreet reported. “While it’s clear people still have a strong interest in moving, total consumer transaction value growth trends are softening.”