After June’s rapid mortgage-rate hike, affordability is taking center stage among homeowners, buyers and sellers.
Power Shifting Towards Buyers
Redfin’s chief economist, Daryl Fairweather, said, “Data on home-tours, offers and mortgage purchase applications suggest that homebuyers have noticed the shift in power and are no longer leaving the market in droves. Buyers coming back (to the market) will provide support to the housing market, but between now and the end of the year, I think the power will continue to shift towards buyers, resulting in mild price declines from month to month.”
During the four-week period ending June 26, the median asking price of newly listed homes declined -1.5% from the all-time peak it had reached in the spring. Also, a record-high share of sellers dropped their asking prices.
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What does this all mean? Sellers are paying attention to buyers’ concerns about affordability.
Leading Indicators of Homebuying Activity in June
- 30-year mortgage rates fell slightly to 5.7% for the week ending June 30
- “Homes for sale” searches on Google were down -7% y/y during the week ending June 25
- Touring activity dropped -3% as of June 26 from the start of the year, compared to an increase of +24% last year at this same time, according to ShowingTime
- The seasonally-adjusted Redfin Homebuyer Demand Index plunged -15% y/y during the week ending June 26 while increasing +7% w/w
- Mortgage purchase applications dropped -24% y/y while the seasonally-adjusted index inched up +0.1% w/w during the week ending June 17
Key Market Takeaways (covers four-week period ending June 26)
- Median home sale price jumped +14% y/y to record $399,249
- Median asking price of newly listed home jumped +15% y/y to $405,547
- Monthly mortgage payment on median asking price home hit $2,459 at mortgage rate of 5.7%, an increase of +45% from $1,694 one year ago when rates were 2.98%
- Pending home sales plummeted -13% y/y, the largest decline since May 2020
- New listings down -7% y/y
- Active listings down -8% y/y, the smallest decline since March 2020
- 46% of for-sale homes went under contract within first two weeks of being on the market
- DOM – 17 days
- 54% of homes sold above list price
- 6.5% of for-sale homes had a price drop
Thanks to Redfin.
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