Redfin Homebuyer Demand Index slipped -1% y/y in June. Mortgage Bankers Association home purchase applications down to lowest level since May 2020. Home prices continue rising, homes selling in fewer days and more homes selling above list price.
“Month of June a Turning Point” in 2021’s Hot Housing Market
Taylor Marr, the lead economist with Redfin, said, “The month of June was a clear turning point in the ultra-hot housing market of 2021.”
Marr went on to say, “As home prices continue to set records, some buyers have hit their limit and are stepping back. At the same time, homes are hitting the market at pre-pandemic levels again, which may finally ease competition and bring some sense of balance to the market. The upshot is that fewer bidding wars could actually keep some on-the=fence buyers in the market and lure back some of the home-buying dropouts.”
Key Data Points Indicate Market Losing Steam
Take a look at some of these key data points that suggest the housing market is cooling from ultra-hot to hot:
- Pending sales were down -9% from the four-week period ending May 30 compared to an increase of +2% during the same time frame in 2019. Overall, pending home sales were up +15% y/y, the smallest increase since July 19 2020.
- Redfin’s Homebuyer Demand Index dropped -1% y/y the end of June for the first time in 2021
- The share of homes for sale with price drops increased to 3.8%. This is the first time this year that the share of for-sale homes with price drops surpassed 2020 levels. The large markets of New York, Washington DC and Chicago drove this trend.
- Mortgage purchase applications fell -5% w/w during the week ending June 27 to their lowest level since May 2020, according to the Mortgage Bankers Association.
- Google reported a continued decline in online house hunting with real estate searches dropping below 2019 levels (-4.5%) for the first time in 2021.
- New listings are hitting pre-pandemic levels. Easing supply may cool bidding wars, offer potential buyers more choices and encourage some potential buyers who had dropped out of the market to return.
Other Key Data Points Indicate Market Still Hot
Simultaneous with “cooling” indicators, take a look at other data points that suggest the housing market is still hot:
- Home prices are still climbing and posting their highest y/y price gains on record.
- The median home-sale price jumped +23% y/y at the end of June to $364,048.
- Asking prices on newly listed homes increased +14% y/y to a median record high of $366,202.
- 55% of homes that went under contract had accepted offer within first two weeks on the market.
- 41% of homes that went under contract ad accepted offer within one week of hitting the market.
- Median DOM was 15 days, a new all-time low.
- A record 55% of homes sold above list price.
- The average home sold for +2.4% more than its asking price. This is an all-tine high and a sale-to-list price ratio of 102.4%.
Thanks to Redfin.