Housing Market Cools, But Relief for Homebuyers Short-Lived

Redfin, Seattle, said median home price appreciation slowed again in October, but provided little relief for homebuyers who have seen double-digit price increases over the past two years.

Redfin reported the median price of homes sold in October rose to $378,700. While this is the slowest growth rate since December 2020, it is still up 13% from a year earlier, marking the 15th consecutive month of double-digit price gains.

Redfin said seasonally adjusted closed home sales and new listings of homes for sale both fell from a year earlier, by 8% and 11% respectively. However, pending sales rose by 3% from September and early signals of demand are picking back up again in the first weeks of November.

Overall, said Redfin Chief Economist Daryl Fairweather, the housing market experienced fairly typical seasonal cooling in October. “The severe lack of inventory is restricting home sales,” she said. “Even though plenty of people bought homes last year, many homebuyers waited while the pandemic went from bad to worse and remote-work policies were finalized. The homebuyers who are just beginning their search are finding that the well has run dry. But I am hopeful that as it becomes easier to get building materials, we will finally have a strong year for new construction in 2022. That’s what the market needs more than anything.”

The report said median sale prices increased from a year earlier in all but one of the 85 largest metro areas Redfin tracks—Bridgeport, Conn., where prices fell by 4.2%. The largest price increases in October 2021 were in Phoenix, AZ (25%), Austin, TX (25%) and McAllen, TX (24%).

Seasonally adjusted home sales in October fell by 8% from a year earlier, the largest decline in 16 months. Home sales fell in 76 of the 85 largest metro areas Redfin tracks. The biggest sales declines were seen in Bridgeport (-26%), New Brunswick, N.J. (-22%) and Salt Lake City (-21%). The largest gains were in places where sales were still somewhat depressed in October 2020, including Honolulu (+18%), New York (+11%), and San Jose, Calif. (+7%).

The report said the typical home that sold in October went under contract in 21 days—more than a week faster than a year earlier, when homes sold in a median 29 days, but up three days from the record low of 15 days in June. In October, 46% of homes sold above list price, down 11 percentage points from the record high in June, but up 11 percentage points from a year earlier. The average sale-to-list price ratio also dipped slightly in October to 100.8%, down from a record high of 102.6% in June but up from 99.5% a year earlier.