A Summer Housing Market Cooldown?
Reports from HouseCanary, Washington, D.C., and Redfin, Seattle, point to slowing housing market activity this summer following a breakneck pace over the past two years.
The HouseCanary U.S. Housing Marke State Level Report said median listed and closed prices increased at a slower pace in May from the first quarter and a year ago. Listings under contract saw a nearly 11 percent decrease year over year, underscoring slowing market activity.
“In May, we saw the first sign of a potential softening in the housing market as mortgage rates are climbing higher than pre-pandemic levels,” said Jeremy Sicklick, CEO of HouseCanary. “It continues to be a challenging environment for buyers, as increased rates, already bloated prices and short supply leading to competitive bidding has made homeownership more expensive.”
At the same time, the report said, price growth slowed compared to February through April of this year, and listings under contract experienced a double-digit decrease year-over-year, indicating slowing market activity may be cooling as we head into the summer months.
“Even so, pent-up demand still exists in the market currently,” the report said. “Over the next few months, we expect to continue to experience short supply and low single-digit price growth.”
The report said in May, 332,965 net new listings were placed on the market, representing a 16.6% decrease from a year ago. Over the past 52 weeks, 3,150,503 net new listings placed on the market, a 4.2% decrease from the 3,287,729 net new listings over the year prior.
The report also noted 346,276 listings went under contract nationwide, a 10.9% decrease from a year ago. Over the past 52 weeks, 3,336,319 properties have gone into contract, a 8.3% decrease from the 3,637,281 properties that went into contract over the year prior.
Meanwhile, Redfin reported homes for sale fell 8% during the four weeks ending June 5, the smallest year-over-year decline since January 2020.
“Sellers are losing control of the housing market as homes that are overpriced and/or less desirable are increasingly having price reductions and taking longer to sell,” said Redfin deputy chief economist Taylor Marr. “Although demand is easing, some homebuyers may jump back into the market when price growth loses steam and interest rates continue to stabilize. A strong labor market will continue to be a driving force for the bulk homebuying demand this year.”
Tours, offers and other requests for help with homebuying, as measured by the Redfin Homebuyer Demand Index, fell 12% last week, and new listings fell 2% during the four-week period, while 21% of sellers dropped their list price, the second-highest share on record, going back through 2015.
Additionally, the report said fewer people searched for “homes for sale” on Google—searches during the week ending June 4 were down 10% from a year earlier.
Redfin said through June 5, the median home sale price rose by 15% year over year to a record $401,372. The median asking price of newly listed homes increased 17% year over year to $413,950.
Active listings (the number of homes listed for sale at any point during the period) fell 8% year over year—the smallest decline since January 2020. Fifty-one percent of homes that went under contract had an accepted offer within the first two weeks on the market, flat from a year earlier; 36% of homes that went under contract had an accepted offer within one week of hitting the market, down from 38% a year earlier.
Redfin said homes that sold were on the market for a record-low median of 15 days, down from 18 days a year earlier; 56% of homes sold above list price, up from 52% a year earlier. However, on average, 5.3% of homes for sale each week had a price drop. Overall, 21.2% dropped their price in the past four weeks, up from 15.2% a month earlier and 10.3% a year ago. This was the highest share since October 2019.
