As the number of homes for sales dips to near record lows, demand increased in June 2023 propping up home prices, even as mortgage rates around 7% have kept many buyers on the sidelines.
This information comes by way of Redfin’s [1] Housing Market Tracker which overall found the median U.S. sale price was $426,056 or 1.5% ($6,341) below the all-time high of $432,397 set in May 2022.
June’s median sale price was down 0.6% early from a year earlier—the smallest decline in the past five months while the average home sold for more that its list price for the first time in roughly a year.
“Today’s housing market is extraordinary; it feels hot even though there are very few homes changing hands,” said Redfin Chief Economist Daryl Fairweather [2]. “Sellers are getting multiple offers if their home is priced well and in a desirable area even though there aren’t a lot of buyers out there. That’s because house hunters have so few homes to choose from. More buyers are starting to come out of the woodwork as they get used to elevated mortgage rates, which is making the market feel even hotter.”
Redfin predicts that mortgage rates will start to gradually decline in response to cooling inflation, but even so, the lower rates are unlikely to bring a critical mass of sellers back to the market anytime soon, meaning housing supply should remain low. If/when rates do ultimately fall more significantly, prices will likely jump as more buyers move off to the sidelines.
Even affordable areas are seeing home prices climb at a quick clip. In Rochester, New York, the median sale price rose 13.1% year over year to $250,000–the biggest increase among the metros Redfin analyzed. It was followed by Milwaukee (11.6%) and Omaha, Nebraska (10.4%).
“We haven’t really felt the effects of high mortgage rates on homebuyer demand in Rochester,” said local Redfin real estate agent Kimberly Hogue [3]. “You can still find a nice house in a desirable part of town for $300,000 or less, and a lot of people here can afford the monthly payment for a home in that price range. Of course, those homes tend to sell for tens of thousands of dollars above the asking price. There are plenty of remote workers moving in, and lately I’ve helped several locals move farther out for more acreage.”
Hogue continued: “I recently had a rural listing get more than 20 offers. One of the bidders offered to send the sellers on a cruise, but the sellers didn’t bite. Instead, they went with an offer that was $100,000 over the asking price.”
Prices fell most in Boise, ID (-10.4%), Austin, TX (-7.8%) and Las Vegas (-7.8%)–pandemic boomtowns that saw prices surge as scores of remote workers moved in.
Seasonally-adjusted pending home sales rose 1.9% from a month earlier in June to the highest level since fall, representing the largest monthly increase since October 2021. Pending sales have now climbed for three consecutive months on a revised basis following 16 straight months of declines. Pending sales fell 16.2% year over year in June, the smallest annual decline in a year. Still, pending sales in June were lower than they were at any point during the three years leading up to the pandemic.
“Homebuyer demand has bottomed out,” Fairweather said. “High rates are still giving a lot of buyers pause, but the sticker shock is no longer as severe as it was when rates skyrocketed last year. With home prices back near record highs, buyers are also less worried that they’ll buy a house that’ll plunge in value.”
Closed home sales dropped 19.8% year over year to the lowest level since May 2020, and fell 3% month over month on a seasonally adjusted basis.
Metro-level statistics, as highlighted by Redfin, include:
- Pending sales: In Boise, Idaho, pending sales fell 70.7% year over year, more than any other metro Redfin analyzed. It was followed by Baton Rouge, Louisiana (-61.8%) and Allentown, Pennsylvania (-54.8%). The smallest declines were in Fort Worth, Texas (-0.6%), Dallas (-2.6%) and El Paso, Texan (-4.6%).
- Closed sales: In Tacoma, Washington, closed home sales dropped 34.2% year over year, more than any other metro Redfin analyzed. Next came Oxnard, California (-31.5%) and Lake County, Illinois (-30.8%). Closed sales rose in one metro: North Port, Florida (4%).
- Prices: Median sale prices fell from a year earlier in 35 of the metros Redfin analyzed. The biggest declines were in Boise (-10.4%), Austin, Texas (-9.7%) and Las Vegas (-7.8%). The biggest increases were in Rochester, New York (13.1%), Milwaukee (11.6%) and Omaha, Nebraska (10.4%).
- Listings: New listings fell most from a year earlier in Allentown (-57.1%), Boise, Idaho (-55.4%) and Hartford, Connecticut (-53.3%). They fell least in McAllen, Texas (-10.3%), Houston (-15.4%) and Detroit (-18.1%).
- Supply: Active listings fell most from a year earlier in Allentown (-49.7%), Boise (-49%) and Hartford (-45.1%). They rose most in New Orleans (38.4%), North Port (31.7%) and McAllen (30.8%).
- Competition: In Rochester, 78% of homes sold above their final list price, the highest share among the metros Redfin analyzed. Next came Hartford (75.3%) and Worcester, Massachusetts (70.8%). The share was lowest in North Port (9.7%), Cape Coral, Florida (12%) and West Palm Beach, Florida (12.2%).
Click here [4] to view the report in its entirety.