Median home sale prices hit a new all-time high this month as the number of homes for sale dropped to a record low, illustrating the grim reality for homebuyers across the country.
The median home sale price rose 14.6 percent from the previous year to a new high of $361,171 during Dec. 2021, a 29.4 percent increase from the same period in 2019, according to a report released Thursday by the online brokerage Redfin.
At the same time, new listings and pending sales both dropped to their lowest levels since January and activity was down overall compared to the same periods of 2020 and 2019 — which Redfin Deputy Chief Economist Taylor Marr attributed to a holiday slowdown.
“The holiday effect of homebuyers and sellers diverting their time and attention towards travel and celebrations was even more extreme than during the pre-pandemic Christmas week of 2019,” Marr said. “We see this slowdown as a temporary consequence of the holidays, and not as an indication that homebuyer demand is backing off.”
Active listings fell 26.1 percent year over year, and were down 44.8 percent from 2018 the data shows, resulting in higher prices for buyers who did purchase houses in December.
“Those who did purchase homes over the holidays paid high prices due to the ongoing supply shortage,” said Marr.
Illustrating the fierce level of competition for the small number of homes available, homes that sold were on the market for a median of just 26 days, down from 33 days in 2020 and 50 days in 2019.
Nearly 30 percent of homes that went under contract had an accepted offer within one week of hitting the market, up from 25.3 percent the year earlier and just 15.8 percent two years ago, while pending home sales were up 4.2 percent year over year but up 55.2 percent compared to 2019.
Fatigued homebuyers in a hyper-competitive market are paying above asking price more than ever according to Redfin, with 42.1 percent of homes selling above list price, up from 33.6 percent a year earlier and just 19.9 percent two years ago, with the average home selling for 0.4 percent above its listing price.
On the mortgage front, mortgage purchase applications decreased by 3 percent week over week during the week ending Dec. 23, while 30-year mortgage rates declined to 3.5 percent.
The Redfin Homebuyer Demand Index was up 17 percent from a year earlier, which measured requests for home tours and home buying services from Redfin agents.
While prices have skyrocketed and supply plummeted throughout 2021, economists like Redfin Chief Economist Daryl Fairweather predict that a rise in mortgage rates in the new year will slow things down.
“Fewer homes are selling because of a lack of supply, while demand remains strong,” she said in a Dec. 23 statement. “But once mortgage rates increase in 2022, I expect the rate of price growth to slow down significantly.”