Like a slow turning ship, the housing market’s supply side is gradually gaining momentum as homes for sale begin to pile and pending sales continue a steady and seasonal decline. As both of these trends continue in the weeks ahead, prices will stop rising as rapidly as they have been and an increasing number of homes for sale will likely see price drops.
For the single week ending July 18, 4.9% of listings had price drops, on par with 2019 levels. Price drops are more common in places such as Phoenix, Austin and Bend, OR where prices rose the fastest due to an influx of Californians during the pandemic.
Even with the share of homes with price drops increasing, overall prices continue to rise. One factor contributing to that is falling mortgage rates, which hit their lowest level this week (2.78%) since early February.
The Redfin Homebuyer Demand Index remains higher than a year ago and has been trending up in recent weeks, suggesting that interest in homebuying remains high (real estate searches on Google trends also show a recent bump). However, mortgage purchase applications are trending down. Growth in new listings, which are still up 2% from a year ago, should offer some relief to potential homebuyers.
“Just as buyers are pulling back, more listings are hitting the market,” said Redfin Chief Economist Daryl Fairweather. “I’m optimistic this will create conditions for a little bit of rain in this inventory drought. 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.”
Unless otherwise noted, the data in this report covers the four-week period ending July 18. Redfin’s housing market data goes back through 2012.
Refer to our metrics definition page for explanations of all the metrics used in this report.
