Existing-home sales fell for the third straight month to a seasonally adjusted annual rate of 5.61 million. Sales were down 2.4% from the prior month and 5.9% from one year ago.
With slower demand, the inventory of unsold existing homes climbed to 1.03 million by the end of April, or the equivalent of 2.2 months of the monthly sales pace.
The median existing-home sales price increased at a slower year-over-year pace of 14.8% to $391,200.
“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” said Lawrence Yun, NAR’s chief economist. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”
Homebuying is as competitive and costly as ever as soaring mortgage rates make the market less inviting for many would-be sellers.
The share of home sellers who dropped their asking price shot up to a six-month-high of 15% for the four weeks ending May 1, up from 9% a year earlier. The 5.9% increase is the largest annual gain on record in Redfin’s weekly housing data back through 2015. For homebuyers, the typical monthly mortgage payment skyrocketed a record 42% to a new high during the same period. Although a growing share of sellers are responding to the palpable drop in homebuyer demand by lowering their prices, sellers remain far outnumbered by buyers, so the typical home flies off the market at the fastest pace on record and for more than its asking price.
“Homebuyers continue to be squeezed in nearly every way possible, which is causing some to take a step back from the market,” said Redfin Chief Economist Daryl Fairweather. “Unfortunately for buyers hoping to find a deal as competition cools, sellers are pulling back even faster, which is keeping the market deep in seller’s territory. So even though price drops are becoming more common, most homes are still selling above asking price and in record time.”
The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 1% year over year during the week ending May 1. It dropped 10% in the past four weeks, compared with a 1% decrease during the same period a year earlier.
Key housing market takeaways for 400+ U.S. metro areas:
Unless otherwise noted, the data in this report covers the four-week period ending May 1. Redfin’s housing market data goes back through 2012.
Data based on homes listed and/or sold during the period:
The median home sale price was up 17% year over year—the biggest increase since August—to a record $396,125.
The median asking price of newly listed homes increased 16% year over year to $408,458, a new all-time high.
The monthly mortgage payment on the median asking price home rose to a record high of $2,404 at the current 5.27% mortgage rate. This was up 42%—an all-time high—from $1,688 a year earlier, when mortgage rates were 2.96%.
Pending home sales were down 4% year over year, the largest decrease since mid-February.
New listings of homes for sale were down 6% from a year earlier, and have been down from 2021 since mid-March.
Active listings (the number of homes listed for sale at any point during the period) fell 18% year over year.
56% of homes that went under contract had an accepted offer within the first two weeks on the market, up from 54% a year earlier, down less than a percentage point from the record high during the four-week period ending March 27.
42% of homes that went under contract had an accepted offer within one week of hitting the market, up from 41% a year earlier, down less than a percentage point from the record high during the four-week period ending March 27.
Homes that sold were on the market for a record-low median of 15.5 days, down from 21.2 days a year earlier.
A record 56% of homes sold above list price, up from 47% a year earlier.
On average, 3.7% of homes for sale each week had a price drop. Overall, 14.9% dropped their price in the past four weeks, up from 11.2% a month earlier and 9.1% a year ago. This was the highest share since mid-November.
The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to an all-time high of 102.8%. In other words, the average home sold for 2.8% above its asking price. This was up from 101% a year earlier.
Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago.
However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist at First American,tweeted just last week on this issue:
“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”
Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value).
To this point, Pulsenomics just released the latest Home Price Expectation Survey – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. Itforecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections:
Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years.
What Does This Mean for You as a Buyer?
With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.
As an example, let’s assume you purchased a $360,000 home in January of this year (the median price according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below):
If you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today.
Year-to-year, sales declined 2.4%. NAR’s chief economist calls it a “double whammy” for buyers who face rising mortgage rates and sustained price increases.
WASHINGTON – U.S. existing-home sales dipped in February, continuing a seesawing pattern of gains and declines over the last few months, according to the National Association of Realtors® (NAR).
Each of the four major U.S. regions tracked in NAR’s monthly survey saw sales fall on a month-over-month basis. While sales activity year-over-year was also down overall, the South – the region that includes Florida – saw an increase while the remaining three regions reported drops.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – sank 7.2% from January to a seasonally adjusted annual rate of 6.02 million in February. Year-over-year, sales decreased 2.4% (6.17 million in February 2021).
“Housing affordability continues to be a major challenge as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” says Lawrence Yun, NAR’s chief economist. “Some who had previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate.
“Monthly payments have risen by 28% from one year ago – which interestingly is not a part of the consumer price index – and the market remains swift with multiple offers still being recorded on most properties.”
Total housing inventory at the end of February totaled 870,000 units, up 2.4% from January and down 15.5% from one year ago (1.03 million). Unsold inventory sits at a 1.7-month supply at the current sales pace, up from the record-low supply in January of 1.6 months, but down from 2.0 months in February 2021.
“The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers’ savings,” Yun says. “However, I expect the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction.”
The median existing-home price for all housing types in February was $357,300, up 15.0% from February 2021 ($310,600), with prices higher in all four regions. It’s the 120th consecutive months for year-over-year increases – the longest-running streak on record.
Properties typically remained on the market for 18 days in February, down from 19 days in January and 20 days in February 2021, with 84% of February homes on the market for less than a month.
First-time buyers made up 29% of February sales, an increase from 27% in January, though down from 31% in February 2021.
Individual investors or second-home buyers, who make up many cash sales, purchased 19% of homes in February, down from 22% in January and up from 17% in February 2021. All-cash sales accounted for 25% of transactions in February, down from 27% in January and up from 22% in February 2021.
Distressed sales – foreclosures and short sales – represented less than 1% of sales in February, equal to the percentage seen both month-to-month and year-to-year.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.76% in February, up from 3.45% in January. The average commitment rate across all of 2021 was 2.96%.
Single-family and condo/co-op sales: Single-family home sales jumped to a seasonally adjusted annual rate of 5.35 million in February, down 7.0% month-to-month and down 2.2% year-to-year. The median existing single-family home price was $363,800 in February, up 15.5% from February 2021.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 670,000 units in February, down 9.5% from 740,000 in January and down 4.3% from one year ago. The median existing condo price was $305,400 in February, an annual increase of 10.9%.
“For the past couple of years, buyers have had to contend with a market of high demand, low inventory and a mix of uncertainties with COVID-19 protocols,” says NAR President Leslie Rouda Smith. “Consumers are presently challenged with higher mortgage rates, so now, more than ever, interested buyers need the trusted expertise of Realtors in order to navigate this current market.”
Regional breakdown: Existing-home sales in the Northeast slipped 11.5% in February, registering an annual rate of 690,000 – a 12.7% drop from February 2021. The median price in the Northeast was $383,700, up 7.1% from one year ago.
Existing-home sales in the Midwest sagged 11.3% from the prior month to an annual rate of 1,330,000 in February, a 1.5% decrease from February 2021. The median price in the Midwest was $248,900, a 7.5% climb from February 2021.
Existing-home sales in the South fell 5.1% in February month-to-month, posting an annual rate of 2,790,000 – which was an increase of 3.0% compared to February 2021. The median price in the South was $318,800, an 18.1% jump from one year earlier.
For the sixth straight month, the South experienced the highest pace of price appreciation compared to the other regions.
“Employment is vital for housing demand,” said Yun. “The Southern states are seeing faster job growth, and consequently, it’s the only region to experience a sales gain from a year ago.”
Existing-home sales in the West slid 4.7% from the previous month, reporting an annual rate of 1,210,000 in February, down 8.3% from one year ago. The median price in the West was $512,600, up 7.1% from February 2021.
Federal Reserve Chair Jerome Powell testifies about monetary policy and the state of the economy before the House Financial Services Committee on Wednesday. Powell reiterated the Fed is gearing up to raise interest rates this month.
Federal Reserve Chair Jerome Powell said on Wednesday the central bank is on track to start raising interest rates this month — likely by a quarter percentage point — in an effort to combat inflation, which is the highest it’s been in nearly 40 years.
But the Fed will proceed with caution, Powell told the House Financial Services Committee, as Russia’s invasion of Ukraine adds more uncertainty to the economic outlook.
“The economics of these events are highly uncertain,” Powell said. “So far, we’ve seen energy prices move up further and those increases will move through the economy and push up headline inflation, and also they’re going to weigh on spending.”
The average price of gasoline in the U.S. approached $3.66 per gallon on Wednesday. Rising energy prices have been a significant driver of annual inflation, which hit 7.5% in January – the highest level since 1982.
Powell says it’s too soon to tell on Ukraine
Powell said it’s too soon to know how large or long-lasting price increases tied to events in Ukraine will be, so he and his colleagues on the central bank’s rate-setting committee are prepared to be flexible.
“We’re never on auto-pilot,” Powell said. “Those of us on the committee have an expectation that inflation will peak and begin to come down this year. And to the extent that inflation comes in higher or is more persistently high than that, then we would be prepared move more aggressively.”
Forecasters expect the Fed to impose additional interest rate hikes later this year in an effort to cool red-hot consumer demand, which has outstripped supply and driven prices sharply higher.
The profit on a typical home sale last year was just over $94,000, an increase of 45% from the profit in 2020 and 71% from pre-pandemic profits.
About 42% of homeowners were considered equity-rich at the end of last year
The amount of tappable equity (equity above the 20% usually required by lenders to back a mortgage) grew by $2.6 trillion last year to a record total of $9.9 trillion.
The stunning jump in home values over the course of the Covid-19 pandemic has given U.S. homeowners record amounts of housing wealth. What they choose to do with it could have impacts on the broader economy.
Annual home price gains averaged 15% in 2021, up from 6% in 2020, according to CoreLogic. Strong pandemic-driven demand, record low supply and record low mortgage rates conspired to create those hefty gains. Bidding wars are now the norm, and desperate buyers are competing with investors who want to cash in on the hot market. The upward trend is continuing, despite winter being historically the slowest season for housing.
“While we expect this year’s buyers will eventually see some relief from the 2021 frenzy, home shoppers continue to face challenging conditions in the early days of 2022,” said Danielle Hale, chief economist for Realtor.com. “In fact, last week’s home price and time on market trends suggest competition intensified.”
According to a Gallup poll, real estate has been rated the best long-term investment for eight years in a row.
Real estate tops the list because you’re not just buying a place to call home – you’re investing in your future. Real estate is typically considered a stable and secure asset that can grow in value over time.
Let’s connect today if you’re ready to make real estate your best investment this year.
A year before his death, he launched the Poor People’s Campaign to fight job and housing inequality, among other issues. Historians say the Poor People’s Campaign and the Chicago Open Housing Movement laid the groundwork for the 1968 Fair Housing Act
Although Martin Luther King, Jr. is most remembered for his struggle to secure voting rights and stop segregation, the civil rights icon’s dream of racial equity reached far beyond integrated public life — it also included economic security and housing rights for the millions of minority and low-income Americans who’d been relegated to their cities’ under-resourced neighborhoods and housing projects.
King began planting the seeds of what would become the Poor People’s Campaign in Chicago, where thousands of Black Chicagoans struggled with job and housing insecurity — something they’d hoped they escaped during the Great Migration, the term used to describe a decades-long exodus from the fields of the South to the factories of the North.
Although some Black people found great success in Chicago, Detroit, New York City and other similar places, many more found the only thing that changed in their life was their address.
“Now is the time to make real the promises of democracy,” he added. “Now is the time to open the doors of opportunity to all of God’s children.”
According to articles by HuffPost and NPR, Dr. King spent much of 1966 in Chicago, even moving his family to an apartment on the city’s predominately Black west side. There, King and Southern Christian Leadership Conference (SCLC) launched the Chicago Open Housing Movement, whose goals included the rehab of public housing, increasing the supply of affordable housing, pushing for diversity and integration in businesses and unions, a $2 minimum wage and the abolition of wage garnishment.
Over the course of the year, King and SCLC activists held citywide rallies, planned demonstrations in front of real estate brokerages and marched into Chicago’s all-white neighborhoods, which were met with violent reactions from the city’s white residents. “Well, this is a terrible thing,” King said in a soundbite acquired by NPR. “I’ve been in many demonstrations all across the South, but I can say that I have never seen, even in Mississippi and Alabama, mobs as hostile and as hate-filled as I’m seeing in Chicago.”
Eager to quell the violence, Chicago’s mayor, Richard J. Daley, agreed to meet with King and other activists in August 1966 to work out an agreement, which included building future public housing with “limited height requirements,” and requiring the Mortgage Bankers Association to make mortgages available regardless of race.
King hailed the agreement ‘‘the most signiﬁcant program ever conceived to make open housing a reality,’’ but tempered his assessment by recognizing it as only “the ﬁrst step in a 1,000-mile journey.’’
The next year, King went back to the South and began planning the Poor People’s Campaign, which was built from his experiences in Chicago the year before. He and the SCLC began creating a blueprint for economic and housing equity that addressed the systems and policies that kept minority and low-income communities behind the eight ball.
“This is a highly significant event,” King told the SCLC in November 1967, according to an archive at Stanford’s King Institute. “[This] the beginning of a new co-operation, understanding, and a determination by poor people of all colors and backgrounds to assert and win their right to a decent life and respect for their culture and dignity.”
He garnered support from civil rights leaders in American Indian, Puerto Rican, Mexican American, and poor white communities and began planning another March on Washington to demand jobs, unemployment insurance, a fair minimum wage, and education for adults and children. “It’s as pure as a man needing an income to support his family,” King said.
King was assassinated before he could finish planning the demonstration; however, other SCLC leaders and his wife, Coretta Scott King, banned together and finished planning the march, which took place on Mothers’ Day 1968. After the initial demonstration, protestors pitched tents on the Mall in Washington and lobbied for fair employment and housing policies until their park permit expired a month later.
Even though the campaign was largely unsuccessful in making widespread change — they did secure free food surplus distribution to 200 counties — historians say the Poor People’s Campaign and the Chicago Open Housing Movement laid the groundwork for the 1968 Fair Housing Act, which ensures that all Americans have access to equal housing opportunities and outlaws discrimination based on an individual’s race, color, religion, sex, national origin, disability or familial status.
“And we have to continue in the legacy of MLK and the civil rights movement and the legacy of abolition movements of before,” said Paige May, a Chicago resident who spoke to NPR after an event to celebrate MLK.
“We have a lot of work to do, but it’s also — it feels like a day that’s celebratory in a lot of ways, right? But in the sphere of struggle and resistance.”
Many homeowners who plan to sell in 2022 may think the wise thing to do is to wait for the spring buying market since historically about 40 percent of home sales occur between April and July. However, this year’s expected to be much different than the norm. Here are five reasons to list your house now rather than waiting until the spring.
1. Buyers Are Looking Right Now, and They’re Ready To Purchase
The ShowingTime Showing Index reports data from more than six million property showings scheduled across the country each month. In other words, it’s a gauge of how many buyers are out looking at homes at the current time.
The latest index, which covers November showings, reveals that buyers are still very active in the market. Comparing this November’s numbers to previous years, this graph shows that the index is higher than last year and much higher than the three years prior to the pandemic. Clearly, there’s an influx of buyers searching for your home.
Also, at this time of year, only those purchasers who are serious about buying a home will be in the market. You and your loved ones won’t be inconvenienced by casual searchers. Freddie Mac addresses this in a recent blog:
“The buyers who are willing to house hunt in a winter market, when there are fewer options, are typically more serious. Plus, year-end bonuses and overtime payouts give people more purchasing power.”
And that theory is proving to be true right now based on the number of buyers who have put a home under contract to purchase. The National Association of Realtors (NAR) publishes a monthly Pending Home Sales Index which measures housing contract activity. It’s based on signed real estate contracts for existing single-family homes, condos, and co-ops. The latest index shows:
“…housing demand continues to be high. . . . Homes placed on the market for sale go from ‘listed status’ to ‘under contract’ in approximately 18 days.”
Comparing the index to previous Novembers, while it’s slightly below November 2020 (when sales were pushed to later in the year because of the pandemic), it’s well above the previous three years.
The takeaway for you: There are purchasers in the market, and they’re ready and willing to buy.
2. Other Sellers Plan To List Earlier This Year
The law of supply and demand tells us that if you want the best price possible and to negotiate your ideal contract terms, put your house on the market when there’s strong demand and less competition.
A recent study by realtor.com reveals that, unlike in previous years, sellers plan to list their homes this winter instead of waiting until spring or summer. The study shows that 65% of sellers who plan to sell in 2022 have either already listed their home (19%) or are planning to put it on the market this winter.
Again, if you’re looking for the best price and the ability to best negotiate the other terms of the sale of your house, listing before this competition hits the market makes sense.
3. Newly Constructed Homes Will Be Your Competition in the Spring
In 2020, there were over 979,000 new single-family housing units authorized by building permits. Many of those homes have yet to be built because of labor shortages and supply chain bottlenecks brought on by the pandemic. They will, however, be completed in 2022. That will create additional competition when you sell your house. Beating these newly constructed homes to the market is something you should consider to ensure your house gets as much attention from interested buyers as possible.
4. There Will Never Be a Better Time To Move-Up
If you’re moving into a larger, more expensive home, consider doing it now. Prices are projected to appreciate by approximately 5% over the next 12 months. That means it will cost you more (both in down payment and mortgage payment) if you wait. You can also lock in your 30-year housing expense with a mortgage rate in the low 3’s right now. If you’re thinking of selling in 2022, you may want to do it now instead of waiting, as mortgage rates are forecast to rise throughout the year.
5. It May Be Time for You To Make a Change
Consider why you’re thinking of selling in the first place and determine whether it’s worth waiting. Is waiting more important than being closer to your loved ones now? Is waiting more important than your health? Is waiting more important than having the space you truly need?
Only you know the answers to those questions. Take time to think about your goals and priorities as we move into 2022 and consider what’s most important to act on now.
If you’ve been debating whether or not to sell your house and are curious about market conditions in your area, let’s connect so you have expert advice on the best time to put your house on the market.