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Spring typically brings new energy to the housing market, but this year, the momentum is stalling. While a wave of new listings has hit, many buyers are still sitting out, prompting some would-be sellers to rethink their plans, new data from Redfin shows.
According to Redfin’s data, pending home sales dipped 0.4 percent year over year to the lowest May level since 2020. Part of that was attributed to sky-high costs and economic uncertainty.
Home prices are elevated, with the median sale price up 1.2 percent from the previous year. At the same time, the average mortgage rate is nearing 7 percent, making mortgage payments unaffordable for many would-be buyers.
Ben Ambroch
“If a home is in a desirable neighborhood, especially if it’s fixed up, it will sell fairly quickly,” Ben Ambroch, a Redfin Premier agent in Milwaukee, said in Redfin’s report. “But even that type of home now gets two or three offers, as opposed to the 10 offers it would have gotten a few years ago.”
During the four weeks ending June 1, new listings increased by 6.3 percent. Year over year, listings dropped in 11 of the 50 most populous U.S. metro areas, including steep declines in San Jose, California; Orlando, Florida; and West Palm Beach, Florida.
Compared to previous years, late May experienced a seasonal slowdown in new listings much earlier and sharper than usual. It was the biggest late-May drop in a decade, which is yet another sign that sellers are losing confidence.
According to Redfin, there is an advantage for buyers who are active in the market. The typical home now sells for roughly 1 percent below asking. Only 28.4 percent of homes are selling above asking, which is down from 32 percent the previous year.
Ambroch says sellers, especially those in less desirable neighborhoods or with homes needing updates, must be strategic.
“Sellers of homes that need work in fringe neighborhoods should be able to find a buyer, but it’s important they come to the table with realistic expectations on price and timing, and a willingness to negotiate,” he said. “Price within a fair range based on the neighborhood, understand that buyers will be inspecting the home, and be prepared to give concessions.”
