The U.S. housing market is experiencing a substantial decline in home listings, with new listings down by 22.4% year over year due to homeowners' reluctance to sell. This scarcity has led to a competitive market and prevented prices from falling rapidly. Although pending home sales have decreased, homes are selling quickly, with almost half selling within two weeks. The impact on prices has varied across different U.S. metro areas, with some experiencing significant declines while others see increases. Prospective sellers may be encouraged to enter the market as sustained high home prices may balance the supply-demand dynamics in the future.
According to a report released by Redfin earlier this month, there has been a significant decrease in new home listings in the United States. Over the four weeks leading up to April 23, new home listings were down by 22.4% compared to the previous year. This decline is one of the largest observed since the beginning of the pandemic, as stated in the report.
One of the reasons behind this decrease is that homeowners are reluctant to sell their homes due to high mortgage rates, which have been increasing in the past two weeks. Homeowners are hesitant to give up their current low mortgage rates. Additionally, there are fewer homes available for sale compared to what is typically expected at this time of the year, making it more appealing for homeowners to stay in their current residences.
Despite a 17% decrease in pending home sales compared to the same period last year, the lack of new listings is leading to faster home sales. The report states that almost half of the listed homes are being sold within two weeks of being put on the market, which is the highest percentage seen in nearly a year.
Due to the limited availability of homes for sale, the competition among buyers is preventing prices from dropping rapidly. Redfin's report states that the median sale price in the United States decreased by 2.8% compared to the previous year, amounting to $367,053. This marks the ninth consecutive four-week period with declining sale prices.
While high mortgage rates have discouraged some potential homebuyers from entering the market, there is still a higher demand for homes than the number of homes available for sale. According to Taylor Marr, the deputy chief economist at Redfin, this situation is beneficial for homeowners who are looking to sell their homes promptly or out of necessity.
Out of the 50 metropolitan areas analysed by Redfin, home sale prices experienced a decline in 29 of them. The largest decrease was observed in Austin, Texas, with a significant drop of 13.7% compared to the previous year. Following closely was Oakland, California, with a decline of 13.5%. Other metropolitan areas in California rounded out the top five with San Francisco experiencing a 12.3% decrease, Anaheim dropping by 10%, and Sacramento witnessing a decline of 9.4% in prices.
On the other hand, there were cities where home sale prices actually increased. Fort Lauderdale, Florida, saw the most substantial rise, with prices going up by 10% from the previous year. Miami followed with an increase of 8.7%, and Cleveland experienced a 7.9% increase in prices. The two other major cities in Ohio, Cincinnati (up 7.5%) and Columbus (up 7%), also saw higher home prices.
In areas where new listings are particularly scarce, sellers who set their home prices in accordance with the market are attracting multiple offers. According to Mr. Marr, the deputy chief economist at Redfin, the sustained high home prices and values are also promising for the future of the housing market. This is because these elevated prices may eventually encourage more potential sellers to participate in the market instead of remaining hesitant or passive.
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