At a time when the housing market would normally be slowing down, it just keeps getting hotter and hotter. The median price of homes sold during the four weeks ending Aug. 9 hit an all-time high of $314,000, according to a report from tech-focused real estate brokerage Redfin.
That median sales price is a 10 percent year-over-year increase — the biggest jump in more than six years, the brokerage said.
At the same time, 46 percent of listed homes had accepted an offer within the first two weeks on the market, the highest level since at least 2012 when the brokerage began keeping track. That’s up from 33 percent of listings finding a buyer within two weeks during the same time last year. The increases prompted the brokerage to declare that “seasonality is out the window this year.”
“Thanks to seemingly insatiable homebuyer demand, the typical seasonal patterns of the housing market have been short-circuited this year,” the report said.
“Home prices typically decline this time of year after hitting a seasonal peak in late June or early July. This year, in the four weeks ending Aug. 9, prices were up 3.5 percent month over month. Last year, home prices fell 1.7 percent over that same timeframe.”
Homebuyer demand is plateauing, rather than falling, and the supply of homes is down 28 percent, according to Redfin. For the week ending Aug. 9, Redfin’s Homebuyer Demand Index, which is seasonally adjusted, rose 31 percent from pre-pandemic levels in January and February while pending sales are up 13 percent year over year but flat month-to-month at that elevated level compared to last year, according to the report.
“Right now you have a set of people who are highly motivated to buy — they have the money and they have the desire, and they aren’t afraid of competition,” said Redfin chief economist Daryl Fairweather in a statement.
“But there is an even bigger set of homeowners who are very comfortable where they are and don’t want to rock the boat. Some simply don’t want to deal with the hassle of moving during a pandemic and facing competition when they buy,” Fairweather continued. “Others may be struggling financially, but they are protected right now by mortgage forbearance, so they want to hold onto the equity in their homes in case the government doesn’t come through with additional assistance. That imbalance between people who want to buy and people who want to sell is driving up prices.”
Part of the reason homes are still selling quickly is because some home types and locations that were considered undesirable before the pandemic are seeing new interest, according to Redfin.
“There’s not an area that isn’t hot right now because of a lack of homes for sale,” said New Jersey Redfin listing agent Darlene Schror in a statement.
She continued: “Buyers today have a whole new set of preferences, such as being far away from neighbors and having space for a proper office, on top of all the usual criteria like highly rated schools. The houses that surprise me the most are the ones out in the boondocks, so far from the cities. You’ve got to drive to everything; there’s nothing to walk to. Before the pandemic, nobody wanted that stuff. Homes listed in those areas would sit on the market for a long time. Now they are hot.”
The brokerage said that because new listings are flat, not rising, compared to last year’s levels, that suggests that homes that would have been put up for sale in the spring are “lost inventory” — in other words, that homebuyers shouldn’t expect a phantom “pent-up supply” to flood the market.
Still, a new 0.5 percent fee for mortgage refinances, but not mortgage purchases, starting September 1 may incentivize some to sell their homes and buy another one, according to Redfin. That could also lead to more buyer demand if sellers want to buy again, the brokerage said.
But Redfin ended its report warning that a lack of an economic stimulus plan from Congress could mean “serious risks” for the U.S. economy and the housing market.
“So far real estate has been one of the most resilient parts of the economy, but without additional government aid to make up for the lost consumer spending from millions of lost jobs and business closures, it is possible that larger economic fallout is on the horizon,” the report said.
“If the economy gets a lot worse and mortgage forbearance expires, we could see a large wave of homes hit the market simultaneous with a drop in homebuyer demand, quickly flipping the supply and demand equation and driving home prices down.”