Redfin: Fewer Listings, Faster Home Sales

Redfin, Seattle, said fewer homes are selling than usual this spring—but the ones that are changing hands are going fast, with a small pool of buyers circling an even smaller pool of listings.

Redfin reported new listings of homes for sale dropped 19% year over year during the four weeks ending May 7, contributing to an “unseasonal” monthly decline in total inventory. Redfin also reported 16% fewer pending home sales than a year earlier, reflecting the lack of listings and the group of would-be buyers who have been priced out by 6%-plus mortgage rates and record-high monthly payments.

Despite the inventory crunch, pending sales increased over the past week, reflecting seasonal patterns. Additionally, mortgage-purchase applications rose by 5% on a seasonally adjusted basis.

Redfin Deputy Chief Economist Taylor Marr said the pool of buyers is “small but determined,” with nearly half of the homes that do sell doing so within two weeks. That share has increased over the last month, which isn’t typical for this time of year.

“This spring’s housing market is hot but cold, with scant listings making it less active than usual but fast and competitive at the same time,” Marr said. “The good news is that buyers are out there, trying to find a seat in a game of musical chairs. The bad news is there aren’t enough chairs. A lot of potential home sales are locked up until mortgage rates come down to a level for which current owners would be willing to trade in their 3% rate. The problem is that’s unlikely to happen anytime soon, as although inflation is steadily coming down from last year’s record-high levels, it’s still above target.”

The report noted wide geographical disparities. In Austin, Texas, Redfin agent Gabriel Recio said homebuying demand has picked up this spring, but there are enough homes for sale that he’s not seeing much competition. Pending sales and new listings are each down about 9% from a year earlier in Austin, smaller declines than most metros, and prices are down the most in the country (-18% YoY).

In Jacksonville, Fla., Redfin agent Heather Kruayai said sellers are subdued–and so are a lot of prospective buyers. “Homeowners are locked in by low mortgage rates. They’re not selling unless they need to move for something like a new job or another major life change,” she said. “Homes that do go on the market are selling quickly if they’re low-priced starter homes, but middle-of-the-road and expensive homes are sitting.”

The report said the seasonally adjusted Redfin Homebuyer Demand Index—a rose slightly from a month earlier during the week ending May 7 and down just 2% from a year earlier, the smallest annual drop in a year. Demand is barely declining from year-ago levels because buyers were backing off quickly at this time last year as mortgage rates rose above 5% for the first time since 2009.

The report also noted Google searches for “homes for sale” were little changed from a month earlier during the week ending May 6, and down about 15% from a year earlier. Touring activity as of May 6 was up 26% from the start of the year, compared with a 14% increase at the same time last year, according to home tour technology company

Home-sale prices declined in 30 metros, with the biggest drops in Austin (-17.7% YoY), Oakland, Calif. (-15.7%), San Francisco (-11.9%), Las Vegas (-10.7%) and San Jose, Calif. (-9.7%). That’s the biggest drop since at least 2015 for Austin.

Redfin said 48% of homes that went under contract had an accepted offer within the first two weeks on the market, down from 51% a year earlier but up from 46% a month earlier. “Typically, we see month-over-month declines at this time of year,” Marr said. Homes that sold were on the market for a median of 32 days, the shortest span since September. That’s up from 19 days a year earlier, which was close to the record low. And 32% of homes sold above their final list price. That’s the highest share since September but is down from 54% a year earlier.