Rising Rates Create Stressful Environment for Aspiring Homeowners

HouseCanary, Inc. has released its latest Market Pulse report, — a continuous review of proprietary data and insights from Housing Canary — covering 22 listing-originated metrics and comparing data between April 2021 and April 2022.

New housing inventory remained negative in the month of April, leading to even more affordability issues for many prospective buyers. After a prolonged period of historically low interest rates, speculation continues regarding the Federal Reserve's upcoming plans, but experts believe many housing market participants have already priced in the effect of near-term rate hikes.

There’s been a sharp rise in mortgage rates this year, including the 30-year fixed mortgage rate, which has increased by 200 basis points since January. Rising rates, alongside inflated prices, have produced a difficult buying environment as the cost of homeownership increases, but could also deter prospective sellers from listing their properties in the current market.

"In April, net new housing inventory remained negative, leading to more affordability issues for many prospective buyers,” said Jeremy Sicklick, Co-Founder and CEO of HouseCanary. “After a sustained period of historically low interest rates, there continues to be speculation regarding the Federal Reserve's upcoming plans, but we think many housing market participants have already priced in the effect of near-term rate hikes. For starters, we have seen a sharp rise in mortgage rates this year, including the 30-year fixed mortgage rate, which has increased by 200 basis points since January. Rising rates, together with already bloated prices, have made for a difficult buying environment as they increase the cost of home ownership, but could also dissuade prospective sellers from listing their properties in the current market.”

Total Net New Listings:

• Since April 2021, there have been 3,187,324 net new listings placed on the market, which is a 1.5% decrease versus the 52 weeks prior
• Percentage of total net new listings over the last 52 weeks, broken down by home price:

• $0-$200k: 16.0%
• $200k-$400k: 39.1%
• $400k-$600k: 22.8%
• $600k-$1mm: 14.9%
• >$1mm: 7.2%

• Percent change in net new listing activity over the last 52 weeks versus the same period in 2021, broken down by home price:

• $0-$200k: (-21.7%)
• $200k-$400k: (-10.8%)
• $400k-$600k: +18.0%
• $600k-$1mm: +26.0%
• >$1mm: +17.6%

Monthly Net New Listing Volume (Single-Family Detached Homes):

• Monthly new listing volume was down 7.6% compared to April 2021
• In April, there were 326,455 net new listings placed on the market, representing a 12.0% decrease year-over-year
• For the month of April, the percent change in net new listing volume compared to April 2021, broken down by home price:

• $0-$200k: (-25.3%)
• $200k-$400k: (-22.8%)
• $400k-$600k: (-1.1%)
• $600k-$1mm: +7.7%
• >$1mm: +3.1%

Listings Under Contract:

• Over the last 52 weeks, 3,386,036 properties have gone into contract, representing a 6.4% decrease relative to the 52 weeks prior
• Percentage of total contract volume since April 2021, broken down by home price:

• $0-$200k: 16.6%
• $200k-$400k: 39.5%
• $400k-$600k: 22.3%
• $600k-$1mm: 14.5%
• >$1mm: 7.1%

• Percent change in contract volume over the last 52 weeks versus the same period in 2021, broken down by home price:

• $0-$200k: (-24.2%)
• $200k-$400k: (-14.8%)
• $400k-$600k: +10.8%
• $600k-$1mm: +19.1%
• >$1mm: +14.0%

Monthly Contract Volume (Single-Family Detached Homes):

• For the month of April, there were 348,594 listings that went under contract nationwide, which is a 6.6% decrease year-over-year.
• For the month of April, the percent change in contract volume compared to April 2021, broken down by home price:

• $0-$200k: (-14.8%)
• $200k-$400k: (-15.4%)
• $400k-$600k: +5.0%
• $600k-$1mm: +8.5%
• >$1mm: (-0.7%)

Median Listing Price Activity (Single-Family Detached Homes):

• For the week ending April 29, 2022, the median price of all single-family listings in the U.S. was $427,975, an 11.8% increase year-over-year.
• For the week ending April 29, 2022, the median closed price of single-family listings in the U.S. was $428,223,a 15.8% increase year-over-year.
• The median price of all single-family listings in the U.S. is up 1.3% month-over-month and the median price of closed listings has increased by 4.7% month-over-month.

“In turn, we expect to see continued limited new supply coming onto the market over the next couple months, leading to sustained upward pressure on prices,” said Sicklick. “But looking ahead to the end of 2022, we do see room for the market to ultimately moderate."

Overall, the nationwide supply shortage continues to dominate the current market dynamics as new inventory remained negative for the month of April 2022. Some 326,455 net new listings were placed on the market, representing a 12% decrease versus April 2021. The decrease in net new listings was driven by a 7.6% decrease in new listing volume, along with a 33.5% increase in removals compared to April 2021. Additionally, there were 348,594 listings that went under contract, resulting in a 6.6% decrease versus April 2021. Experts predict to see continued limited new supply coming onto the market over the next couple months, leading to potentially sustained upward pressure on prices.

To read the full report, including charts and methodology, click here.