New listings of homes for sale dropped 19% year over year during the four weeks ending May 7, according to data from Redfin (NASDAQ:RDFN). As a result of the inventory shortage and mortgage rates that remain above 6%, there were 16% fewer pending home sales than one year earlier.
But despite the inventory crunch, Redfin reported pending sales have increased over the last week, as they typically do this time of year, and mortgage-purchase applications are up 5% on a seasonally adjusted basis. Nearly half of the homes that sell are purchased within two weeks of being listed and that share has increased over the last month – an atypical situation for this time of year. The median home sale price was $370,625, down 2.7% from a year earlier; this marked the 11th-straight four-week period of declines.
“This spring’s housing market is hot but cold, with scant listings making it less active than usual but fast and competitive at the same time,” said Redfin Deputy Chief Economist Taylor Marr. “The good news is that buyers are out there, trying to find a seat in a game of musical chairs. The bad news is there aren’t enough chairs.”
Marr added, “A lot of potential home sales are locked up until mortgage rates come down to a level for which current owners would be willing to trade in their 3% rate. The problem is that’s unlikely to happen anytime soon, as although inflation is steadily coming down from last year’s record-high levels, it’s still above target.”