{"id":76181,"date":"2023-05-05T05:00:08","date_gmt":"2023-05-05T12:00:08","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=76181"},"modified":"2023-05-04T16:13:58","modified_gmt":"2023-05-04T23:13:58","slug":"housing-market-update-fed-signals-rate-pause","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/housing-market-update-fed-signals-rate-pause\/","title":{"rendered":"Housing Market Update: Homes Sell Quickly as Historic Drop in Listings Fuels Competition Among Buyers"},"content":{"rendered":"

Homebuyers and sellers are unlikely to face another large mortgage rate jump after the Federal Reserve indicated it intends to pause interest rate increases following a year of aggressive hikes.<\/span><\/i><\/h2>\n

Elevated mortgage rates are prompting many homeowners to stay put, resulting in bidding wars as buyers compete for a small pool of homes. But buyers and sellers can at least take a little comfort in knowing the Federal Reserve probably <\/span>won\u2019t<\/span><\/a> raise interest rates again anytime soon.<\/span><\/p>\n

\u201cWhile a pause in Fed rate hikes doesn\u2019t mean a significant drop in mortgage rates is coming, it does at least alleviate one layer of uncertainty in the housing market,\u201d said Redfin Economics Research Lead Chen Zhao<\/a>. \u201cUnexpectedly bad inflation data, more banking turmoil or failure to raise the U.S. debt ceiling could throw a wrench in the Fed\u2019s plans, but homebuyers and sellers can feel a little more confident that mortgage rates won\u2019t skyrocket again.\u201d<\/span><\/p>\n

For now, homes are getting snatched up quickly as a shortage of listings sparks bidding wars between the buyers who remain in the market despite elevated mortgage rates.<\/span><\/p>\n

Nearly half (48%) of homes that sold during the four weeks ending April 30 went under contract within two weeks, down from 51% a year earlier but up from 46% a month earlier. While that jump may seem small, it\u2019s notable because the share of homes selling in two weeks typically <\/span>falls<\/span><\/i> in April after peaking in March. We haven\u2019t yet seen signs of a peak this year.<\/span><\/p>\n

Redfin agents say reasonably priced homes in desirable areas are selling especially quickly as buyers compete for a limited number of homes for sale. New listings in April were down 23% from a year earlier, the second biggest decline since the start of the pandemic. That outpaced the 17% year-over-year decline in pending sales, a gauge of how many buyers are in the market.<\/span><\/p>\n

\u201cI received five offers on a house that I listed on Thursday,\u201d said<\/span>\u00a0<\/span>Lindsay Katz<\/span><\/a>, a Redfin Premier<\/a> real estate agent in Los Angeles<\/a>. \u201cOne of my other sellers got a full-price offer on her $1.15 million home, but had to cancel the listing because with prices and rates so high and inventory so low, she couldn\u2019t find another home she could afford. She wouldn\u2019t even qualify to buy her own home anymore.\u201d<\/span><\/p>\n

The <\/span>total <\/span><\/i>number of homes for sale has steadily declined over the last month, going against the typical spring inventory bump. That\u2019s because buyers are draining the supply of homes for sale faster than sellers are filling the sink with new listings. New listings and pending sales did both rise on a month-over-month basis in April, which is typical for springtime.<\/span><\/p>\n

\u201cA lot of homeowners are just now expressing interest in selling, whereas in a typical year that would have happened a month or two ago,\u201d said <\/span>Steve Centrella<\/span><\/a>, a Redfin Premier<\/a> agent in <\/span>Washington, D.C.<\/span><\/a> \u201cSome sellers are coming forward because they\u2019re noticing there are buyers out there, in spite of high rates. A lot of them are sellers who aren\u2019t also buyers, like people listing a second home or rental property. They\u2019re not as hesitant to give up a low mortgage rate because they\u2019re not turning around and taking on a higher one.\u201d<\/span><\/p>\n

Leading indicators of homebuying activity:<\/span><\/h2>\n