The long-term buyer-friendly housing market may be coming to an end. Pending home sales in the U.S. rose 9.6% year over year in the four weeks ending May 10, reaching the highest level since September 2022, according to a new report from Redfin.
The long period of favorable conditions in the housing market for buyers may be coming to an end.
Pending home sales in the U.S. rose 9.6% year over year in the four weeks ending May 10, reaching the highest level since September 2022, according to a new report from Redfin.
Several factors may be attracting buyers. Redfin cited an improving job market and a third consecutive week of declines in mortgage rates in April as contributing factors to the rise in confidence, but the daily average returned to 6.57% on May 13. Spring seasonality may also be playing a role, the report said, but the seasonal push appears to arrive later this year.
Supply is not keeping up. According to Redfin data, the number of new listings fell 1.6% year over year, the third straight week of declines. According to the Mortgage Bankers Association, mortgage purchase applications rose 4% from the previous week.
Median sales price increased 2.2% year over year to $397,740, the second largest increase in the past seven months. The daily average 30-year fixed mortgage rate was 6.57% as of May 13, near the highest level since August, according to Mortgage News Daily. The weekly average for the week ending May 7 was 6.37%, according to Freddie Mac.
Chen Zhao
“Home hunters should be careful. As more buyers enter the market, they may lose some bargaining power,” said Chen Zhao, head of economic research at Redfin. “With more buyers on the market, there can be more competition, bidding wars, higher prices, and more difficulty securing the perfect home.”
With 3.5 months of supply remaining, the market remains below the 4-5 month range that is considered balanced. Redfin said the gap between buyer and seller activity has narrowed and could continue to narrow if demand accelerates.
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