The red-hot market has caused a sudden pull-back in home sales, and now sellers are rushing to get in before it cools off.
The supply of homes for sale increased 9% last week compared with the same period a year ago. Since it began tracking the metric, the company has recorded the biggest annual gain.
New listings rose almost twice as fast as they did a year ago in the four weeks ending May 15.
Home sellers are in a hurry to find a buyer because of rising mortgage rates.
The sellers see the market changing. The number of signed contracts on existing homes fell in April. They were down 9% from April of that year. The most timely indicator of how buyers are reacting to higher mortgage rates is the signed contracts index. It is the sixth month in a row that sales have declined.
According to the U.S. Census, April sales of newly built homes were much larger than expected.
Mortgage rates have risen sharply since the start of the year, with the biggest gains in April and early May. The 30-year fixed mortgage rate started the year at 3% and is now over 5%.
Lindsay said that they used to get 10 to 15 offers on most houses.
The Stocker's sold their home. The stockers were worried that the housing market was cooling.
We talked a lot about that. Are we making a mistake here? Are we not in the boat? Is everything going to crash in the next three months and we're going to have to sell our house?
Falling mortgage rates largely offset the increases in home prices during the first two years of the epidemic.
A buyer buying a $300,000 home with a 20% down payment and a 30-year fixed mortgage would get an average interest rate of 4% in May 2019. The principal and interest would be paid on a monthly basis. The house was 5% more expensive in 2020 but the monthly payment dropped to $1,119.
By the year 2021, the monthly payment had increased by $100. With prices up another 21% and mortgage rates rising to around 5.5%, the monthly payment hit $1,991, almost $800 a month more than it was in 2019.
Home sellers are now seeing less competition from buyers, six months after they were in the driver's seat. A demand index from Redfin, which measures requests for home tours and other home-buying services, was down 8% year over year during the week ending May 15. The decline was the largest since the Pandemic.
In February, I met with sellers who were going to sell in June and it was different than it will be in June because the market has completely changed.
When the Stockers listed their home, they were thrilled. They are moving out of California and building a home in Washington state.
We joke that we might be leaving at the right time.
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