{"id":76371,"date":"2023-06-15T05:00:04","date_gmt":"2023-06-15T12:00:04","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=76371"},"modified":"2023-06-14T14:42:56","modified_gmt":"2023-06-14T21:42:56","slug":"housing-market-update-supply-drops-mortgage-rates-high","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/housing-market-update-supply-drops-mortgage-rates-high\/","title":{"rendered":"Housing Market Update: There Are Nearly 40% Fewer Homes For Sale Than Pre-Pandemic"},"content":{"rendered":"

Inventory has posted its biggest decline in over a year, with homeowners hanging onto their comparatively low mortgage rates. That trend will probably persist, as the Fed\u2019s announcement that it may hike interest rates a few more times is likely to keep mortgage rates elevated. Low supply is stifling sales, but many buyers are still showing early signs of interest. <\/span><\/i><\/p>\n

The total number of U.S. homes for sale dropped 6% from a year earlier during the four weeks ending June 11, the biggest decline in 13 months. <\/span>New<\/span><\/i> listings dropped 23%, continuing a 10-month streak of double-digit declines. Those add to the deepening post-pandemic inventory shortage; there are 39% fewer homes for sale now than there were five years ago, in June 2018.\u00a0<\/span><\/p>\n

The inventory crunch is partly due to a homebuilding <\/span>slump<\/span><\/a> that\u2019s lasted for over a decade and partly to mortgage rates falling to record-low levels during the pandemic, then shooting up. Mortgage rates have more than doubled since 2021, landing at close to 7% this week. The record-low mortgage rates of 2020 and 2021 drove a homebuying boom, depleting inventory. When rates started going up in the beginning of 2022, many would-be sellers backed off, failing to fill the inventory hole. Elevated rates <\/span>discourage homeowners<\/span><\/a> who would prefer to hold onto a comparatively low rate from selling.\u00a0<\/span><\/p>\n

Pending home sales are down 17% year over year, the biggest decline in over four months, but it isn\u2019t all due to a lack of demand. People are still showing interest in buying. Mortgage-purchase applications <\/span>rose 8%<\/span><\/a> over the last week, and Redfin\u2019s Homebuyer Demand Index\u2013a measure of requests for tours and other services from Redfin agents\u2013is up over the last two weeks and near its highest level in a year.\u00a0 That means there\u2019s a fair amount of pent-up demand, and many buyers will be ready to pounce when more homes hit the market. Demand outpacing supply is preventing home prices from falling drastically: The median sale price is down just 1.1%, the smallest annual decline in three months.\u00a0<\/span><\/p>\n

This week\u2019s economic news indicates that mortgage rates are unlikely to decline in the next few months, which may mean new listings stay low for the time being and the inventory shortage deepens. The latest <\/span>inflation<\/span><\/a> report shows that price increases have continued to cool, and the Fed announced that it will <\/span>pause<\/span><\/a> interest-rate hikes this month after nearly a year of increases but may hike a couple more times this year.\u00a0<\/span><\/p>\n

\u201cThe Fed\u2019s indication that there are more rate hikes to come is not what homebuyers want to hear. It\u2019s likely to keep mortgage rates elevated and may even push them up a bit,\u201d said Redfin Economics Research Lead Chen Zhao<\/a>. \u201cPeople who are sitting on the sidelines, waiting for mortgage rates to decline, should know that\u2019s unlikely to happen in the foreseeable future. If a home that’s in your price range and has everything on your wishlist hits the market, there’s no good reason to wait.\u201d<\/span><\/p>\n

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