Once the home market turned the page to March, it soon became clear this wasn’t going to be the record-shattering spring of yesteryear.
The number of homes sold dropped nearly 4 percent on a seasonally adjusted basis from February to March, and the number of homes that went pending declined by a similar amount, according to a new market report from Redfin.
Still, the median price of a home sold in March leapt by 6 percent month over month to $412,700. This was the largest monthly price increase since 2013, but also reflected many homes that went under contract in February, Redfin Chief Economist Daryl Fairweather said.
The overall picture in March was clear: This still-frenzied market just couldn’t quite match the activity it sustained in the spring of 2021.
The number of home sales in March was 8 percent lower than the same month last year. And Redfin’s team expects that trend to continue.
“We expect the combination of surging mortgage rates and record-high home prices to cause more homebuyers to drop out of the market,” Fairweather said in the report.
It wasn’t just buyers who dropped out of the market, either. New listings were down 6 percent from March of last year.
“Unfortunately, homeowners are turning their back on the market too,” Fairweather said in the report. “Instead of being motivated to list before prices weaken, potential home sellers may be choosing to wait-out the impending market cooldown.”
Despite this decline in activity, the competitive imbalance between buyers and sellers remained very much intact.
Homes were selling five days faster in March than in February, dropping to 20 days on the market on average. The supply of active listings available at any given time was down nearly 13 percent from last year’s already depleted levels.
As a result, the median sale price in March rose 17 percent year over year.
Chris Lefforge, a Redfin real estate agent in Austin, said the rising mortgage rates have had a particularly big effect on investors in his area. Higher monthly payments are making some investors wary of the Austin market right now, he said.
The market conditions may create a window of opportunity for other cash buyers, however.
“Everyone is watching mortgage rates right now,” Lefforge said in the report. “Buyers using traditional financing are worried about being priced out, but all-cash buyers are rubbing their hands together, thinking that high rates will dry up the competition and they will be able to swoop in and bid unopposed.”
Other markets have been running even hotter in the early spring.
In Denver, Indianapolis and the Washington cities of Seattle and Tacoma, half of homes went pending in five days or fewer. Denver and Seattle each saw three in four homes sell for above the listed price — the highest rate of competition in the nation, outside the San Francisco Bay Area.