Redfin, the Seattle-based, technology-powered real estate company, is reporting that the month of May marked a turning point in the pandemic housing craze, as buyers regained some control over the housing market. The company does note, however, that the increased sense of buyer control came with a great cost, as 5%+ mortgage rates and record-high prices have eliminated many buyers from the market.
According to the latest Redfin Homebuyer Demand Index, pending home sales posted their largest annual decline since spring 2020, declining -9% during the four-week period ending on May 29, 2022. The number of homes for sale climbed to a new high for this year, posting its smallest decline since April 2020.
A growing share of sellers are recognizing the new limits to their power. More than one in five dropped their price, the highest rate since October 2019.
In a statement prepared to accompany the report, Redfin’s Economics Research Lead Chen Zhao said:
“The sudden surge in mortgage rates led to a sudden and significant cooldown in the housing market in May. However, mortgage rates are now stabilizing, and homes remain in short supply, so while we do expect home-price growth rates to decline, we don’t expect prices to fall much at the national level. For homebuyers trying to determine the best timing this year, the main benefit of waiting is that there may be less competition as supply starts to build up.”
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