The Covid-19-fueled housing market with homes selling well above asking price and record-setting prices may have reached its peak — at least according to recent data.
That doesn’t mean housing prices are going to come down in the near future, and in many parts of the country the housing market continues to remain red hot, but some national indicators are showing early signs of balancing, according to Redfin Economist Taylor Marr. He said the “frenzy” of competitiveness that defined the spring market has eased – although the market is still above its pre-pandemic levels.
“We clearly see a pattern that basically the market hit peak levels of competition in the early spring,” Marr said. “We still see that competition is easing even after controlling for the typical seasonality.”
The indicators that mean a moderating market include:
- Pending home sales rose 9%, the slowest growth since June 2020, while the actual number of pending sales fell to the lowest level since April 2021.
- Homes that sold were on the market for a median of 18 days, up from the all-time low of 15 days seen in late June and July. Although that is still down from 33 days a year earlier.
- On average, 5.1% of homes for sale each week had a price drop, up 1 percentage point from the same time in 2020, and the highest level since the four-week period ending October 13, 2019. Price drops are a big indicator of an easing housing market.
- 51% of homes sold above list price, up from 32% a year earlier. But that indicator has been falling since the four-week period ending July 11, when it peaked at 55%.
- 48% of homes that went under contract had an accepted offer within the first two weeks on the market, above the 44% rate of a year earlier, but down 8 percentage points from the 2021 peak set during the four-week period ending March 28.
“The housing market has clearly become slightly more favorable to buyers,” said Redfin Chief Economist Daryl Fairweather in a Redfin blog post Sept. 1. “Homes are taking longer to sell, which gives buyers more time to make thoughtful decisions about whether to make offers. Home prices have plateaued, so buyers shouldn’t feel rushed to buy before prices rise further. And the fact that more sellers are dropping their list price is a sign that sellers have to be realistic about their price expectations.”
But despite some signs of easing, there are still numerous signs the market is historically strong. Mortgage purchase applications increased for the week ending Aug. 27. Home tours were up 11% so far this year, compared to a 37% increase over the same time in 2020, according to data from hour tour technology company ShowingTime.
Redfin’s own Homebuyer Demand Index also edged up slightly last week to its highest level since April 11. The seasonally adjusted Redfin Homebuyer Demand Index is a measure of requests for home tours and other services from Redfin agents.