Homes are still selling at record-high prices and speed, yet asking prices and pending sales—which were rising at this time in 2019—began to flatten out or decline in May. What does it mean? It could be too soon to tell.
The latest data from the research team at Redfin reveals a slight temperature drop in an insanely hot market, but those experts say it's too soon to determine whether they are seeing typical early seasonal changes or the start of a post-pandemic cooling. That the month included both a holiday weekend plus a re-opening of businesses as the pandemic stay-home suggestions lifted makes it even more difficult to determine the causes of the slim changes.
"The housing market was going 100 miles per hour and now it's down to 80," said Redfin Chief Economist Daryl Fairweather. "This is not the bursting of a bubble. Rather, it's a sign that consumers might rather spend their time and money on other things besides housing now that travel, dining, and entertainment are resuming in full force."
According to Redfin's report, pending home sales fell 3% from the four-week period ending May 2 compared to a 2% increase the same period in 2019 and up 38% compared to 2020. Asking prices nationwide dropped $2,500 in May to a median of $354,975, up 11% from the period in 2020.
New listings continue to decrease, down 8% from 2019 and 5% from the previous four-week span.
Seattle Redfin real estate agent Alysan Long told Redfin there are signs that "buyers could be pulling back."
"Homes are staying on the market past the date the sellers had planned to review offers and other homes are being listed without an offer review date, neither of which was happening earlier this spring. We're increasingly seeing homes only get one offer, and even homes that are still getting multiple offers are receiving fewer offers than they would have a few weeks ago."
Despite these indicators of potential pending relief from the red-hot housing environment, home sales in May set all kinds of new records (based on Redfin's records dating back to 2012), including a record-high median home sale price of $355,558, also a record year-over-year increase at 24%. An all-time high of 52% of homes sold for more than their list price, up from 26% the same period a year earlier.
Redfin reported a record-breaking 102.0% average sale-to-list price ratio, which measures how close homes are selling to their asking prices. This means that the average home sold for 2.0% more than its asking price. A year ago, it sold for 1.5% below asking. Homes sat on the market for an average of 16 days, down from 37 in 2020—also a record.
The entire report is available at Redfin.com.