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The extreme dearth of new homes on the market is a key component keeping home sale prices from falling further than they already have, according to a new report.
“New listings of homes for sale fell 22.4% nationwide from a year earlier during the four weeks ending April 23, one of the biggest declines since the start of the pandemic,” the report released Friday by Redfin reads.
While homeowners are staying put out of reluctance to lock in higher mortgage rates — resulting in a lack of inventory of homes for sale, the few homes on the market are drawing competition and selling quickly — preventing home prices from dropping too far, according to the report.
Home prices are down 2.8 percent year over year, according to Redfin data. Prices have fallen fast in some of the most expensive cities, dropping 13.7 percent in Austin, Texas; 13.5 percent in Oakland, California; and 12.3 percent in San Francisco.
At the same time, homebuyers are battling for the small batch of homes, and nearly half the homes on the market are selling within two weeks, the highest portion in nearly a year according to Redfin.
“High mortgage rates have caused some homebuyers to bow out of the market,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “But there are still more people looking for a home than there are homes for sale. That’s good news for the homeowners who want or need to sell their homes now.
“In certain parts of the country where new listings are especially rare, sellers who price their homes in line with the market are attracting multiple offers. Propped-up home prices and values also bode well for the future of the housing market because they may eventually lure more prospective sellers off the sidelines.”
Phoenix Redfin agent Heather Mahmood-Corley said demand is far outpacing supply in her area.
“New listings have slowed over the last few weeks and buyers are clamoring for the homes that do come on the market,” she said in a statement. “Nice, well-priced homes are getting multiple offers. I showed a home to a buyer last weekend and we had to wait in line because there were so many prospective buyers there. It was the first time in a year I’ve had to wait in line to see a house.”
The average 30-year fixed mortgage rate inched up to 6.43 percent during the week ending April 27, the second straight small weekly increase after five weeks of declines.
Mortgage purchase applications during the week ending April 21 increased 5 percent from the week earlier but were down 28 percent from a year ago, according to Redfin.