Redfin: Homes Sell Quickly as ‘Historic’ Drop in Listings Fuels Competition Among Buyers

Redfin, Seattle, said elevated mortgage rates continue to prompt many homeowners to stay put, resulting in bidding wars as buyers compete for a small pool of homes.

“While a pause in Fed rate hikes doesn’t mean a significant drop in mortgage rates is coming, it does at least alleviate one layer of uncertainty in the housing market,” said Redfin Economics Research Lead Chen Zhao. “Unexpectedly bad inflation data, more banking turmoil or failure to raise the U.S. debt ceiling could throw a wrench in the Fed’s plans, but homebuyers and sellers can feel a little more confident that mortgage rates won’t skyrocket again.”

Redfin reported for now, homes are getting snatched up quickly as a shortage of listings sparks bidding wars between the buyers who remain in the market despite elevated mortgage rates. Nearly half (48%) of homes that sold during the four weeks ending April 30 went under contract within two weeks, down from 51% a year earlier but up from 46% a month earlier.

Redfin agents say reasonably priced homes in desirable areas are selling especially quickly as buyers compete for a limited number of homes for sale. New listings in April fell by 23% from a year earlier, the second biggest decline since the start of the pandemic. That outpaced the 17% year-over-year decline in pending sales, a gauge of how many buyers are in the market.

“I received five offers on a house that I listed on Thursday,” said Los Angeles Redfin Premier agent Lindsay Katz. “One of my other sellers got a full-price offer on her $1.15 million home, but had to cancel the listing because with prices and rates so high and inventory so low, she couldn’t find another home she could afford. She wouldn’t even qualify to buy her own home anymore.”

Redfin noted the total number of homes for sale has steadily declined over the past month, going against the typical spring inventory bump. That’s because buyers are draining the supply of homes for sale faster than sellers are filling the sink with new listings. New listings and pending sales did both rise on a month-over-month basis in April, which is typical for springtime.

“A lot of homeowners are just now expressing interest in selling, whereas in a typical year that would have happened a month or two ago,” said Steve Centrella, a Redfin real estate agent in Washington, D.C. “Some sellers are coming forward because they’re noticing there are buyers out there, in spite of high rates. A lot of them are sellers who aren’t also buyers, like people listing a second home or rental property. They’re not as hesitant to give up a low mortgage rate because they’re not turning around and taking on a higher one.”

The report said active listings (the number of homes listed for sale at any point during the period) rose by 5.9% from a year earlier, the smallest increase since summer. Active listings fell 2% from a month earlier; typically, they post month-over-month increases at this time of year.

Months of supply rose to 2.7 months, up from 1.9 months a year earlier; 47.5% of homes that went under contract had an accepted offer within the first two weeks on the market, down from 51.5% a year earlier but up from 45.7% a month earlier. Homes that sold were on the market for a median of 33 days, the shortest span since October. That’s up from 19 days a year earlier, which was close to the record low.

Redfin also reported 31.3% of homes sold above their final list price, the highest share since September but down from 53.9% a year earlier. On average, 4.8% of homes for sale each week had a price drop, up from 2.8% a year earlier. The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, was 99.3%. That’s the highest level since September but is down from 102.5% a year earlier.