Homes Are Selling for Near-Record Highs as Supply Falls to New Low, Demand Picks Up
July 17, 2023 | Lily Katz | RedFin
A record low number of homes for sale combined with an uptick in homebuyer demand propped up housing prices in June, even as elevated mortgage rates kept many buyers on the sidelines. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The median U.S. home sale price was $426,056 in June, just 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% from a year earlier–the smallest decline of the past five months–and the average home sold for more than 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. “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.
While mortgage rates are expected to start gradually declining in response to cooling inflation, they’re unlikely to fall enough to bring a critical mass of sellers back to the market anytime soon, meaning housing supply should remain low. When rates do ultimately fall more significantly, prices will likely jump as more buyers move off of the sidelines.
Home Prices Climb Relatively Quickly in Affordable Markets
Affordable areas are seeing home prices climb relatively quickly. In Rochester, NY, 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, NE (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. “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.
Source: Redfin
