Homes Sales Are Down as Market Rates Move Up and Home Prices Remain Elevated

Redfin reported last Thursday (6-1-23) that during the 4-week period ending on May 28th, pending home sales fell 17% year-over-year, marking one of the largest declines since the start of the year. The decline is of note because pending home sales had already started falling at this time last year as mortgage rates climbed above 5%.

The Redfin report points out that homebuying demand has dipped over the last month due to elevated mortgage rates and a scarcity of homes for sale. Average weekly mortgage rates hit 6.79% on June 1st, their highest level since November 2022. That has priced many people out of the housing market. The typical US homebuyer’s monthly housing payment hit a record high of $2,651 last week, up roughly $350 from a year ago.

Limited inventory has also been identified as a major factor in holding back sales: New listings dropped 23% year-over-year, and the total number of homes for sale fell 3%—the second annual decline in 12 months (the first was during the prior four-week period, when they fell 0.2%). The lack of homes on the market is also propping up prices, with the median US sales price down 1.9% year-over-year, the smallest decline in two months.