Redfin Reports Share of Homes with Price Drops Reaches a New High as Mortgage Rates Top 2008 Levels
June 16 2022 - 3:26PM
Business Wire
Rising mortgage rates and the Fed’s actions to
combat inflation will further stretch homebuyer budgets and
encourage more homeowners to stay put
(NASDAQ: RDFN) —The highest share of sellers on record dropped
their list price during the four weeks ending June 12, according to
a new report from Redfin (redfin.com), the technology-powered real
estate brokerage. This came as mortgage rates shot up to levels not
seen since 2008, dwindling the pool of home shoppers.
Still, homebuying has never been more expensive. The typical
buyer with a 30-year fixed-rate mortgage is looking at a monthly
payment of $2,514, up from $1,692 a year ago. But those who remain
in the market may notice they face less competition from other
buyers. Homes are more likely to sit on the market for a few weeks,
compared to last year when they would go under contract within a
week, and home prices are being bid up less often than they were
earlier in the spring.
“The housing market isn’t crashing, but it is experiencing a
hangover as it comes down from an unsustainable high,” said Redfin
deputy chief economist Taylor Marr. “Housing demand has already
cooled significantly to the point that the industry has begun
facing layoffs. This week’s rate hikes will further stretch
homebuyers’ budgets to the point that many more may be priced out.
While a lot of home sellers are already dropping their prices, more
homeowners will likely decide to stay put now that the mortgage
rate on a new home is significantly higher than their current
one.”
“If it weren't for the surge in mortgage rates, the housing
market would still be in a boom right now,” said Redfin Bay Area
real estate agent James Cappello. “Demand from homebuyers was still
extremely high as recently as February, but rates are making it
really tough. Going from 3% to nearly 6% almost instantly has
scared a lot of people out of the market.”
Leading indicators of homebuying activity:
- For the week ending June 16, 30-year mortgage rates rose to
5.78%—the highest level since November 2008, and the largest
one-week increase since 1987.
- About the same number of people searched for “homes for sale”
on Google—searches during the week ending June 11 were flat from a
year earlier.
- The seasonally-adjusted Redfin Homebuyer Demand Index—a measure
of requests for home tours and other home-buying services from
Redfin agents—was down 14% year over year during the week ending
June 12. This was the ninth consecutive week of declines in the
index.
- Touring activity as of June 12 was 3% above the start of the
year compared to 29% at this time last year, according to home tour
technology company ShowingTime.
- Mortgage purchase applications were down 16% from a year
earlier, while the seasonally-adjusted index was up 8% week over
week during the week ending June 10.
Key housing market takeaways for 400+ U.S. metro
areas:
Unless otherwise noted, this data covers the four-week period
ending June 12. Redfin’s weekly housing market data goes back
through 2015.
- The median home sale price was up 14% year over year to a
record $399,806.
- The median asking price of newly listed homes increased 16%
year over year to $409,251.
- The monthly mortgage payment on the median asking price home
increased to $2,514 at the current 5.78% mortgage rate. This was up
49% from $1,692 a year earlier, when mortgage rates were
2.93%.
- Pending home sales were down 8% year over year, on par with the
decrease seen in May 2020.
- New listings of homes for sale were down 1% from a year
earlier.
- Active listings (the number of homes listed for sale at any
point during the period) fell 6% year over year—the smallest
decline since December 2019.
- 50% of homes that went under contract had an accepted offer
within the first two weeks on the market, down from 51% a year
earlier.
- 35% of homes that went under contract had an accepted offer
within one week of hitting the market, down from 38% a year
earlier.
- Homes that sold were on the market for a median of 16 days,
down from 18 days a year earlier and up slightly from the record
low of 15 days set in May and early June.
- 56% of homes sold above list price, up from 53% a year
earlier.
- On average, 5.6% of homes for sale each week had a price drop,
a record high as far back as the data goes, through the beginning
of 2015. In other words, 22.4% of homes for sale during the entire
four-week period had a price drop.
- The average sale-to-list price ratio, which measures how close
homes are selling to their asking prices, declined just slightly to
102.5%. In other words, the average home sold for 2.5% above its
asking price. This was up from 102% a year earlier.
To view the full report, including charts and methodology,
please visit:
https://www.redfin.com/news/housing-market-update-price-drops-hit-new-record/
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
instant home-buying (iBuying), rentals, lending, title insurance,
and renovations services. We sell homes for more money and charge
half the fee. We also run the country's #1 real-estate brokerage
site. Our home-buying customers see homes first with on-demand
tours, and our lending and title services help them close quickly.
Customers selling a home can take an instant cash offer from Redfin
or have our renovations crew fix up their home to sell for top
dollar. Our rentals business empowers millions nationwide to find
apartments and houses for rent. Since launching in 2006, we've
saved customers more than $1 billion in commissions. We serve more
than 100 markets across the U.S. and Canada and employ over 6,000
people.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20220616005899/en/
Redfin Journalist Services: Kenneth Applewhaite,
206-588-6863 press@redfin.com
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