Redfin: Pending Sales of Starter Homes at Highest Level Since October 2022
(Image courtesy of Redfin; Breakout image courtesy of Liza Summer/pexels.com)
Redfin, Seattle, found pending sales of “starter homes” grew 10.2% year-over-year in July to the highest level since October 2022.
Redfin determines the number of so-called starter homes being sold by looking at homes whose sales prices fall into the 5th to 35th percentile of home sales. The price-tier data is calculated in rolling 3-month periods.
The bump in starter home sales contrasts with middle-priced homes (35th to 65th percentile), which fell 6.5% in July year-over-year, and upper-price homes (65th to 95th percentile), which fell by 10% year-over-year. Luxury homes (above the 95th percentile) fell 7.9% year-over-year.
The typical U.S. starter home price sold for $250,000, a record high and up 4.2% year-over-year. However, that’s a slower pace than the middle- and upper-price tiers.
Redfin noted that inventory levels may be keeping prices from rising too quickly. The number of starter homes on the market spiked 18.9% year-over-year to the highest level since 2022. There was an 18.8% rise in new listings.
However, inventory is still well below pre-pandemic levels.
“The overall market remains sluggish, but we are beginning to see first-time homebuyers come off the sidelines, buoyed by falling mortgage rates and an increased number of homes hitting the market,” said Redfin Senior Economist Sheharyar Bokhari. “Not only do you have young families and investors looking at starter homes, you also have buyers who have been forced to consider less-expensive options due to near-record home prices. More buyers means more sales, but so far we aren’t seeing prices skyrocket, because the rising number of homes hitting the market is enough to satisfy the increased demand–a positive outcome for both buyers and sellers.”
Redfin did note that closed sales of starter homes fell 0.6% year-over-year, but that too outpaced closings of middle-priced homes, down by 3.9% year-over-year. And, movement in completed sales typically trails pending sales.
