Buyer demand remained strong in August, but fewer bidding wars and fewer pending sales indicate the market is cooling.
Housing Market Starting to Soften
A new report from Redfin pointed to signs that the August housing market had passed its peak.
Despite pending sales increasing +6% y/y in the four weeks ending September 5, this +6% increase was a -9% decrease in pending sales from its high set in May 2021.
Likewise, the share of homes that were sold above asking prices fell -4.9% to 50.1% during the four weeks ending September 5 from 55% in early July 2021.
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Is Cooling Market Seasonally Typical or Something More?
Taylor Marr, Redfin’s lead economist, indicated that the softening market is due to seasonality. Marr said, “More homes were listed this summer, but they were quickly snatched up by homebuyers even as bidding wars have become more rare.”
Marr noted that new home listings fell -16% from the listings’ peak in June 2021. However, new home listings were down -7% y/y and total active listings were down -23% from this same four-week time period ending the first week in September.
Marr also stated that he expects homebuyer demand to remain strong throughout the fall.
Limited Inventory + Strong Demand = +14% Increase in Median Price BUT Still Down from Peak Price in June
As we’ve repeatedly written, limited inventory combined with strong buyer demand translates into higher prices. During this four-week period ending September 5, the median home-sale price jumped to $358,250, an increase of +14%, and the median asking price of newly listed homes came in at $353,500.
This asking price is comparable to April’s asking prices BUT the asking price of $353,500 is -2% below the all-time asking price high set during June 2021.
Highest Level of Price Drops Since October 2019
This Redfin report pointed to another indicator of a cooling market…an average of almost 5% of for-sale homes during the four-week period ending September 5 had a price drop. This level of price drops is the highest such level per week since October 2019.
Competition via Bidding Wars Easing
During the four weeks ending September, 58.8% of home offers written by Redfin agents fell to 50.8%, a record low for 2021. This percentage of buyers facing bidding wars was down from 62.1% in July and the April peak of bidding wars at 74.2%. This 50.8% was also lower than the August 2020 bidding war rate of 59.4%.
According to a Redfin agent, ”Sellers are still pricing their homes very high, but a lot of buyers had had enough and are no longer willing to pay the huge premiums they were six months ago. Instead of 25 to 30 offers on turnkey homes, we’re now seeing five to seven (offers.)”
Thanks to Redfin and HousingWire.