Rapid home price growth is finally expected to slow if current trends continue, according to a new data analysis from Redfin.
This prediction comes as inventory continues to tick upward and the number of pending sales undergoes its normal, late-summer decline, according to the report published Friday.
“I’m optimistic this will create conditions for a little bit of rain in this inventory drought,” Redfin Chief Economist Daryl Fairweather said in the report. “A homeowner who is thinking of selling to buy again is going to have a much easier time now than they would have back in March. That’s because it’s becoming less competitive to buy and it is still a historically good time to sell.”
As these conditions take hold, Redfin’s team expects more sellers to have to lower their asking prices.
This trend is already underway. During the week ending July 18, just under 5 percent of listings saw price drops, a rate similar to the same period in 2019.
The number of pending home sales was 9 percent higher than the same time last year, but this was the smallest year-over-year increase in over a year. Pending sales were down 11 percent from this year’s peak — more than double the rate of decline observed over the same period the year before the pandemic began.
Meanwhile, home prices rose by 20 percent year over year, the report said.
New listings were up 2 percent year over year, but were down 8 percent from their peak earlier this year. This is consistent with a typical seasonal decline, and is a more modest drop than the one observed two years ago.
The Seattle-based brokerage said the number of requests for home tours and other services from Redfin agents — an internal measure of homebuyer demand — slipped slightly in a recent week but remained high overall. Mortgage purchase applications were down 6 percent week over week even as mortgage rates declined for 15- and 30-year loans, the report said.
There were other signs that price growth may soon begin to decelerate. While the number of homes that sold above list price was at a staggering 55 percent, it’s essentially held steady there since late June. In the same period last year, 29 percent of homes sold above list price.
Meanwhile homes have continued to sell at a once-unheard-of pace. Of the homes that sold in recent weeks, half of them spent approximately 15 days on the market or less — down from 37 days this time last year.
Nearly 2 in 5 homes that went under contract spent less than a week on the market before an offer was accepted. This was a significantly higher percentage than seen at this time last year, but down compared to the previous high in March.