The U.S. real estate market, long crippled by a shortage of inventory, is finally starting to see listings increase. But today, in many places, buyers simply aren’t showing up.
Sellers are grappling with higher and longer rates stifling demand during what is typically the key season for the market. And more of these owners are Cut asking prices more than ever since November 2022, as inventory becomes obsolete, according to Redfin Corp.
“With mortgage rates rising more than 7 percent, buyers’ willingness to take a chance this season is diminished,” said Ralph McLaughlin, senior economist at Realtor.com. “You can have high prices or high mortgage rates, but you can’t have both for long. »
Earlier this year, prospects of rate cuts by the Federal Reserve sparked some optimism for a housing market that had only just emerged from its crisis phase. worse year for used home sales in nearly three decades. But the economy continued to roar, dimming hopes of an upcoming interest rate cut.
“Without a rate cut, a cold reality sets in in the housing market,” said Robert Frick, business economist for Navy Federal Credit Unionsaid.
Buyers receive little, if any, relief from high borrowing costs. The average rate for a 30-year mortgage has hovered around 7% since mid-April. And prices continued to rise. In the four weeks ended May 26, the median sales price was up 4.3% from the previous year to reach a record $390,613, according to Redfin.
House hunters of all kinds are being priced out of the market. New home sales — a bright spot for an inventory-constrained market — fell in April. Existing Home Purchase Contracts That Month slumped at the lowest level in four years. Removal causes listings to pile up rather than being matched to buyers, according to McLaughlin of Realtor.com.
So far, the spring selling season is “definitely a disappointment,” said Lawrence Yun, chief economist for the National Association of Realtors. “At the start of the year, I thought sales would increase throughout the year. »
Across the country
Even though sales are falling on average in the United States, geography matters. Sun Belt markets including Florida and Texas, which boomed with the influx of newcomers during the pandemic, are now cooling in part because people have been priced out, according to Redfin. Meanwhile, western metros like Seattle and the San Francisco Bay Area saw more pronounced corrections in late 2022 and are already starting to recover.
Contract signings are down at least 14% in Houston, West Palm Beach, Fla. and Atlanta, but jumped about that amount in San Jose, California, according to Redfin’s annual data for the four weeks through May 26. Redfin’s pending sales metric was down 3.4% nationally.
Eighteen months ago, homes in the booming suburbs north of Nashville didn’t even stay on the market for a day, said Don Hackford, a real estate agent in Hendersonville, Tennessee. Nowadays, a developer client recently took two homes off the market after receiving low-end offers.
“Everything has kind of stagnated, and it’s frustrating for real estate agents because it’s like we’re left out,” Hackford said. “There is not any work.”
Along the southwest coast of Florida, a booming region hard blow Thanks to soaring homeowners insurance rates, the number of active single-family home listings in the Punta Gorda area has doubled to 2,143 over the past year. Meanwhile, the median sales price for a single-family home fell nearly $30,000 to $351,000 in April from last year, said Leanne Walker, a local broker and president of Punta Realtors. Gorda-Port Charlotte-North Port-DeSoto Inc.
“It’s become very flat,” Walker said. “It’s become essentially a buyer’s market. There are a lot of price reductions.
Price growth could slow more broadly in the coming months, said Chen Zhao, an economist at Redfin. But any deceleration would likely be slow, given pent-up demand from millennials, who will likely continue to support the market.
“The consensus expectation was that rates had already fallen, which would lead to more demand and supply and higher trading volume,” said Redfin’s Zhao. “But instead we continue to get closer to the lowest level we reached about 18 months ago.”
