Homes Continue to Sell in Record Time and at a Record Price, But Are We Near the Peak?

Redfin, the Seattle-based, technology powered real estate brokerage is reporting that for the 4-week period ending on April 4, 2021, the median home-sale price has increased year-over-year (y-o-y) 17% to $338,225, setting yet another new all-time record high. The asking prices of newly listed homes rose 16% y-o-y, to $ 351,851, an all-time high, but were flat from the four-week period ending March 28, 2021. Active listings (the number of homes listed for sale at any point during the period) fell -42% from the same period in 2020 to a new all-time low. This is the largest decrease on record in this data, which goes back through 2016. Forty-six percent of homes that went under contract had an accepted offer within one week of hitting the market, an all-time high and up from 30% during the same period a year earlier. Forty-two percent of homes sold for more than their list price, an all-time high. This was 16 percentage points higher than the same period a year earlier, and 20 percentage points higher than the same period in 2019. And finally, the average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased to 100.5%, an all-time high and 2 percentage points higher than a year earlier. In a statement prepared for the release of the report, Redfin chief economist Daryl Fairweather said, “The housing market is more competitive than we’ve ever seen it, but a couple indicators are causing us to ask whether we’re nearing a peak in terms of how fast demand and prices can grow. Sellers’ asking prices may be starting to flatten in what so far appears to follow a typical seasonal pattern. And the drop in mortgage purchase applications tells me that some buyers are dropping out due to the lack of affordable homes for sale. If these trends continue, we can feel more assured that we are not in the midst of runaway home price speculation or a housing bubble.”