Number of US Homes For Sale Declines Year-Over-Year in May, Reaching The Lowest Level Since 2012

Redfin reported on Wednesday (6-21-23) that in the month of May, the number of homes for sale in the US declined 7.1% year-over-year to 1.4 million units on a seasonally adjusted basis. That is the lowest level in Redfin’s database, which dates back to 2012, and marks the first annual decline since April 2022.

In May 2019, prior to the pandemic, there were 2.2 million homes for sale, meaning that current housing supply is 38.6% below pre-pandemic levels. According to Redfin, America’s housing stock is shrinking because there are very few people selling homes. New listings declined 25.2% year-over-year, the third lowest level on record on a seasonally adjusted basis, as homeowners were handcuffed by high mortgage rates.

Redfin says the median US home sale price in May was $419.103, down 3.1% from a year earlier when prices hit a record high of $423,311. While home prices did decline in May, they posted a smaller decline than April, when prices fell 4.2% from a year earlier (the largest decrease on record with the exception of January 2012).

Adding additional background and her analysis to the report, Redfin’s Chief Economist Dr. Daryl Fairweather said:

“It’s too early to say that price declines have bottomed out. Prices may have room to fall because mortgage rates could still rise. The Federal Reserve just signaled that it is likely to continue raising interest rates this year. That could further hamper homebuyer demand and cause home prices to fall in the near term, though the drops would be minimal. We’re unlikely to see double-digit price declines like we did during the 2008 housing crisis.

Many people think it’s a bad time to buy a home because mortgage rates are high, but they should keep in mind that when rates do ultimately fall, many buyers waiting on the sidelines could jump back in. That could lead to more bidding wars since there aren’t enough homes for sale, and heightened competition could push up prices, offsetting some or all of the benefit of lower interest rates.”