US Existing-Home Sales Slump Just as More New Listings Hit the Market

Redfin reported that new listings of US homes for sale rose 7.9% year-over-year during the four weeks ending February 2, the biggest increase since the end of last year.

On the buying side, Redfin says pending sales have improved marginally from last month but are still down 8.1% year-over-year. It’s a similar story at earlier stages of the homebuying process: Redfin’s Homebuyer Demand Index—a seasonally adjusted measure of tours and other buying services from Redfin agents—ticked up slightly from the week before but remains near its lowest level since last spring.

An increase in new listings and a slowdown in sales are contributing to a growing supply of homes for buyers. There are currently five months of supply on the market, up from 4.4 months a year ago and the highest level in six years, except for the previous four-week period. The larger inventory has led to homes selling below asking price, with the typical home selling for 2% less than list price—the biggest discount in nearly two years.

Redfin attributes the hesitation among buyers to several factors:

• Despite homes selling below asking price, overall costs remain near record highs. Stubbornly high home prices and mortgage rates have pushed the median monthly housing payment to $2,784, up 8.3% year-over-year and just $21 below the all-time high. However, daily average mortgage rates dipped below 7% for the first time since mid-December.
• Some buyers are holding off due to uncertainty over federal economic policy.
• Severe winter weather across the Midwest, Northeast, and South kept many house hunters at home in January.