The latest reading of the US housing market is showing signs of a potential shift, however there is still little pricing relief for buyers. The number of home sellers who dropped their sale price shot up to a six-month high of 15% on May 1st, up from 9% year over year. That is the largest annual gain on record, tracked through 2015. Why are prices still so high?
Supply continues to fall behind as buyers continue to outnumber sellers, that simple. The typical home is flying off the market at the fastest pace on record and for much more than its asking price. “Homebuyers continue to be squeezed in every way possible, which is causing some to take a step back from the market,” says Redfin Chief Economist Daryl Fairweather. “Unfortunately for buyers hoping to find a deal as competition cools, sellers are pulling back even faster, which is keeping the market deep in sellers’ territory, so even though price drops are becoming more common, most homes are still selling above asking price and in record time,” Fairweather stated. The median home sale price was up 17% year over year, in May, to a record $396,125. Homes continue to fly off the shelves at an astronomical pace. Forty-two percent of homes that went under contract during the same time period had an offer accepted within one week of hitting the market. Fifty-six percent had an offer accepted within the first two weeks, with the same percentage of homes selling above asking! Along with record-low inventory, the average mortgage payment on the median asking price rose to an astonishing $2,404 with the current market mortgage rate. This is up 42% year over year when mortgage rates were below 3%.
Usually as interest rates rise, demand lowers and supply evens out. However, right now rates are rising, home values are rising, supply is at an all time low and demand is at an all time high. This should be interesting!