Home sales post rare drop in May as mortgage rates rise

Home prices rose 1.5% month-over-month in May, their lowest increase for any May in Redfin’s records, which date back to 2012, according to a new Redfin report. a technology-driven real estate brokerage firm.

The housing market cooled significantly as mortgage rates hit their highest levels since 2009. Seasonally-adjusted home sales fell 3% month-on-month, their only decline in May outside of 2020, when the onset of the pandemic sent shockwaves through housing. market.

Despite this decline in demand, the stock of homes for sale still fell compared to the previous year. While the market remains tight and new listings are also declining, May saw the smallest drop in active listings since November 2019.

“The sudden and dramatic spike in mortgage rates has been a shock to the housing system,” said Redfin chief economist Daryl Fairweather. “With inflation still at its highest level in 40 years, mortgage rates are likely to remain high for some time, so the market will have to adjust to this new reality.”

She added: “The good news is that cheap debt is no longer fueling unsustainable house price growth, and existing homeowners are in a good position, holding record home equity with debt funded at record mortgage rates. Homebuyers, however, are facing mortgage rates approaching 6%, meaning the housing market slowdown is likely to continue into the fall. But one good thing is that homebuyers are facing less competition for the first time in two years. »

Competition

  • Indianapolis was the fastest market, with half of all homes waiting to sell in just four days, the same as a year earlier. Denver; Omaha, Nebraska; Oklahoma City and Portland, Oregon were the next fastest markets, with five median days on market.
  • In San Jose, Calif., 84.5% of homes sold above list price, more than any other metro Redfin analyzed. Next come 83.6% in Oakland; 79.3% in Worcester, Mass.; 76.3% in San Francisco; and 76% in Rochester, New York.

Prices

  • North Port, Florida recorded the highest price growth in the country, rising 30.5% from last year to $475,000. Tampa is next with 28.1%, followed by Las Vegas (26.8%), Knoxville, Tennessee (25.9%) and Orlando, Florida (25.8%).
  • No metro recorded a price drop in May.

Sales

  • Honolulu leads the nation in year-over-year sales growth, up 5%, followed by Denver, up 4%. El Paso, Texas rounded out the top three, with sales up 3.7%.
  • West Palm Beach, Fla., saw the biggest drop in sales since last year, down 25.5%. This is followed by Lake County, Illinois (-22.9%) and Anaheim, California (-22.4%).

Inventory

  • Elgin, Illinois had the largest increase in homes for sale, up 35% year over year, followed by Chicago (18.9%) and Austin, Texas (15.6%).
  • Allentown, Pa., saw the largest decline in total active listings, down 46.3% since last May. It was followed by Greensboro, North Carolina (-35.2%), Bridgeport, Connecticut (-31.6%) and Hartford (-29.3%).

Redfin estimate

  • According to Redfin Estimate data, Miami (48.4%) had the largest share of homes selling below list price, followed by Baton Rouge, Louisiana (40.6%) and Tulsa, Oklahoma (40. .0%).
  • Sacramento (90.8%) had the largest share of homes expected to sell at or above the list price, followed by Oakland (90.1%) and Worcester, Massachusetts (89.6%).