Home sales hit one of lowest levels grade Home prices hit a record high in May as high home prices, rising mortgage rates and a housing shortage continue to keep buyers on the sidelines.
According to data released by Redfin, there have only been two months in the past decade where home sales have declined: mortgage Interest rates jumped to a 23-year high in October 2023, exist May 2020, the early stage of the epidemic.
“While few homes are changing hands, today’s buyers still face many realities of a hot market,” said Elijah de la Campa, senior economist at Redfin. Redfin stated in a press release.
What does the data say?
After seasonally adjusting, home sales in May fell 1.7% quarter-to-quarter and 2.9% annually, while the median sales price rose 5.1% from a year earlier to a record $439,716.
Meanwhile, the average 30-year fixed mortgage rate hit 7.06% in May. That’s up from 6.43% a year ago and more than double the historic low of 2.68% during the pandemic.
Although prices have increased, many sellers forced Lower bids because there are fewer buyers be motivated Buying a home in a market with mortgage rates this high is staying Stay on the market longer.
About 19% of homes had price reductions in May, compared with 13.2% a year earlier, and the typical time a home was on the market was 32 days. That’s the highest level for any May since 2020, but similar to when homes were on the market a year ago. Price declines occurred primarily in areas with growing housing supply, such as Florida and Texas.
The number of homes for sale increased slightly but is 25% below pre-pandemic levels. The number of new listings increased slightly compared with the previous month. rise 0.3%, but there are rise A significant increase of 8.8% compared to last year. active list (include Unsold homes) rose 0.4% from April A huge 11.1% from Previous year.
What does this data mean for real estate investors?
The real estate market has been in a strange situation for some time. more houses is staying Staying longer on the market in certain areas, most With buyer interest tepid, they are hesitant to buy when interest rates are high.
Meanwhile, as has been the case for some time, some Home buyers are reluctant to list their homes and give up fixed low interest rates, which one Sometimes three points lower than today’s rates. this This has led to a shortage of houses on the market and a lag in housing construction. baby boomers Decide to stay where you are also Exacerbating the current housing shortage. Plus high housing priceswhich caused stagnation in the real estate market.
“Sales are depressed as the high cost of buying a home unnerves both homebuyers and potential sellers,” de la Campa said in a Redfin press release. “With few homes for sale, buyers are moving in in some markets. bidding war, This is Helping push home prices to record highs.
However, if mortgage rates start to fall, sales could pick up. Despite falling inflation, the Fed said it may Keep prices unchanged until September. When the Fed actually cuts rates It’s expectation Keeping it slow and steady means interest rates are likely to grow at a similar pace.
bottom line
While home prices remain at historically high levels, declining home sales mean a seller’s market no longer exists. In some parts of the country, buyers have more influence. But rising interest rates mean even those buyers are hesitant.
With the Federal Reserve expected to keep interest rates steady until the fall, the housing market is likely to remain stagnant through the summer, meaning real estate investors may need to be patient for a while longer.
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