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Home listings plummet to record low in May: Redfin


The number of homes for sale in the US plummeted 7.1% to a record low in May as lending rates continue to trap homeowners, according to a new report from Redfin.

In May, home totals stood at 1.4 million on a seasonally adjusted basis, marking the lowest level since 2012, when Redfin began tracking the data. May also marked the first annual decline in more than a year, the tech-backed real estate agency reported.

In May 2019, before the pandemic hit the housing market, there were 2.2 million homes for sale. That means housing supply in May 2023 was down 36.6% from pre-pandemic levels.

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In particular, new home listings fell 25.2% year-on-year to the third lowest recorded on a seasonally adjusted basis. Many sellers and buyers are hesitant to jump into the market because they don’t want to get a higher monthly mortgage.

House for sale

A home for sale in Fort Washington, Pa. (AP Photo/Matt Rourke, File/AP Newsroom)

According to Redfin, nearly every homeowner has a mortgage rate of less than 6%. In May, the average 30-year fixed mortgage rate was 6.43%, up from 5.23% reported a year earlier.

Since then, the 30-year fixed rate has risen to an average of 6.67%, down slightly from a week earlier. However, it outpaced a year ago when it averaged 5.81%.

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Home supply has been hit hard by a drop in home construction activity following the 2008 Great Recession. In 2020 and 2021, that shortfall is exacerbated by record-low mortgage rates, which” has motivated a lot of homebuyers.” “, Redfin reported.

real estate sign

A sign for sale is posted in front of a home for sale on February 20, 2023 in San Francisco, California. (Justin Sullivan/Getty Images/Getty Images)

The problem is that home shortages are currently contributing to bidding wars in some areas, which are preventing prices from falling even as buyer demand declines.

Just under 40% of homes sold in May, according to Redfin data, sold for more than list price, which is higher than usual for that time of year.

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However, Redfin chief economist Daryl Fairweather said that “it’s too early to say home prices have bottomed out” and that home prices could still fall if mortgage rates continue to rise.

The Federal Reserve indicated earlier this month that it is likely to continue raising interest rates this year, which could hamper demand further and drive prices lower in the near-term, according to Fairweather.

Although potential homebuyers think it’s a bad time to buy a home with high interest rates, Fairweather warned that as interest rates drop, “many of the buyers waiting could come back.”

This will cause more bidding wars, drive prices up and ultimately “forfeit some or all of the benefits of lower interest rates,” Fairweather said.

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