Historic Housing Shortage Shows Signs Of Letting Up As Sales Decline

The housing market turned a corner in April as the inventory crunch showed signs of easing, according to a new report from Redfin, a technology-powered real estate brokerage. The 9% year-over-year decline in homes for sale was the smallest since March 2020 and the first single-digit drop since the start of the pandemic.

While inventory remained at a record low, it fell at a relatively slow pace because soaring mortgage rates tempered home buyer demand, according to the report. Home sales slid 8%, the biggest drop since June 2020, which allowed white-hot home price growth to cool slightly. The median home-sale price rose 16% to $424,000, a slowdown from March’s 17% gain.

“When market conditions are changing it becomes more difficult for home buyers and sellers to see eye-to-eye on pricing,” said Redfin deputy chief economist Taylor Marr. “Many sellers are still seeking sky-high prices for their homes even though rising mortgage rates have limited home buyer budgets. As a result, buyers are backing off, which is causing home sales to fall and the housing shortage to ease. As demand continues to soften, more sellers will likely be forced to drop their prices in order to get offers. The good news is that this should finally bring more balance to the market.”

Median sale prices increased from a year earlier in all of the 88 largest metro areas Redfin tracks. The largest price increases were in Las Vegas (+29%), West Palm Beach, Florida (+29%) and Fort Worth, Texas (+28%).

Home sales fell from the prior year in 87 of the 88 largest metro areas that Redfin tracks. The biggest declines were in West Palm Beach, Florida (-30%), Anaheim, California (-26%) and Bridgeport, Connecticut (-25%). The only metro where sales increased was Allentown, Pennsylvania (+1%).

Seventy-eight of the 88 largest metros tracked by Redfin posted year-over-year decreases in the number of seasonally adjusted active listings of homes for sale. The biggest declines were in Allentown, Pennsylvania (-50%), Greensboro, North Carolina (-40%) and Bridgeport, Connecticut (-35%). The metro areas with the largest increases were Elgin, Illinois (+33%), Chicago (+15%) and Detroit (+10%).

New listings fell from a year ago in 78 of the 88 largest metro areas. The largest declines were in Allentown, Pennsylvania (-58%), Greensboro, North Carolina (-45%) and Lake County, Illinois (-29%). New listings rose the most in McAllen, TX (+13%), Oklahoma City (+6%) and Detroit (+4%).

Home sales that closed in April (which mostly went under contract in March) spent less time on the market and sold for further above list price than a year ago.

The typical home that sold in April went under contract in 18 days—six days faster than a year earlier—and the shortest time on market ever for April.

Fifty-nine percent of homes sold above list price, up 10 percentage points from a year earlier, and the highest level on record in Redfin’s data, which goes back through 2013.

The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to a record 103.2% in April, up from 101.5% a year earlier. In other words, the average home sold for 3.2% above its asking price.

“April’s dismal new home sales data shows an industry besieged by higher construction costs, supply chain disruptions and higher mortgage rates that are giving many potential buyers cold feet,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Given the pipeline for bringing new homes to market is stretched so thin, we shouldn’t expect home building to add much to housing stock for the foreseeable future.”

Other April highlights

Competition

• Denver and Indianapolis were the fastest markets, with half of all homes pending sale in just four days. Next came Omaha, Nebraska; Oklahoma City; and Portland, Oregon, each with five days on market.
• The most competitive market in April was San Jose, California, where 88.5% of homes sold above list price, followed by 87.7% in Oakland, California; 78.7% in Denver; 77.8% in San Francisco and 75.6% in Oxnard, California.

Prices

• Las Vegas had the nation’s highest price growth, rising 29% since last year to $445,000. West Palm Beach, Florida had the second highest growth at 28.6% year-over-year price growth, followed by Fort Worth, Texas (28.3%), Tampa, Florida (27.6%) and Nashville (26.9%).
• No metros saw price declines in April.

Sales

• Allentown, Pennsylvania led the nation in year-over-year sales growth, up 1.2%, followed by Greensboro, North Carolina, up -0.2%. Omaha, Nebraska rounded out the top three with sales up -0.5% from a year ago.
• West Palm Beach, Florida saw the largest decline in sales since last year, falling 29.8%. Home sales in Anaheim, California and Bridgeport, Connecticut declined by 25.7% and 24.9%, respectively.

Inventory

• Elgin, Illinois had the highest increase in the number of homes for sale, up 32.6% year over year, followed by Chicago (15.3%) and Detroit (9.9%).
• Allentown, Pennsylvania had the largest decrease in overall active listings, falling 49.9% since last April. Greensboro, North Carolina (-39.9%), Bridgeport, Connecticut (-35.2%), and Fort Lauderdale, Florida (-32.4%) also saw far fewer homes available on the market than a year ago.

Redfin Estimate

• Miami (39.3%) had the largest share of homes predicted to sell for below list price, according to Redfin’s home value estimator, followed by Baton Rouge, Louisiana (32.5%) and Tulsa, Oklahoma (29.7%).
• Oakland, California (94.8%) had the largest share of homes predicted to sell at or above list price, followed by Seattle (94.4%) and San Jose, California (93.5%).