Homeowners are opting to stay in place amid rising interest rates and economic uncertainty, bringing housing costs to new heights, Redfin reported.
The number of active home listings dropped to 469,304 in the four-week period ending March 20, a 23% year-over-year decline, according to data released by the real estate brokerage. New homes listed for sale also fell 7% during the same time frame.
Competition for the diminishing supply of inventory contributed to an increase in the median home price, which hit $379,230, also a record. The value represented a 17% annual increase, the largest price gain since last summer. It was also 6% higher than the previous four weeks.
“With so much uncertainty in the world and economy, it makes sense that homeowners are staying put,” said Redfin chief economist Daryl Fairweather in a press release. “High prices and rising mortgage rates are a strong impediment even for homeowners who would ideally like to move to a better home.”
The 30-year mortgage rate, which by one measure jumped to a three-year peak of 4.42% this week, has accelerated by more than a full percentage point since the end of 2021. That quickly put the likelihood of new purchases out of reach for millions.
The National Association of Realtors also revealed this week that pending home sales declined unexpectedly in February for the fourth month in a row. The trade group attributed the drop to lack of available supply.
The Mortgage Bankers Association determined February to be the least affordable month for home buyers since 2009. Even as the total volume of loan applications has decreased in 2022, average purchase-mortgage amounts accelerated in the first quarter, frequently setting new records, according to the association.
Buyers hoping for price relief may struggle to find it in the near future, said Odeta Kushi, deputy chief economist at First American, who agreed that rising rates would likely discourage new listings and keep inventory low.
“Sellers continue to have the upper hand as we enter the busiest time of the year for the housing market. Not enough supply relative to demand will keep house price growth positive, but not at the record-breaking pace we saw in 2021,” she said in research commentary.
More homes were being snatched up quicker than ever as well, Redfin said. The number of homes under contract that received accepted offers in two weeks or less after being listed increased to 59% — another new high — compared to 53% a year ago. Meanwhile, 45% of homes listed had an accepted offer within just seven days, up from 41% in the same four-week period of 2021. Homes stayed on the market for a median of 21 days, down from 31 a year ago, with half of homes selling above list price, up from 39% 12 months earlier.