Residence costs hit one other file and should go larger: Redfin

Even as home prices hit another record high, competition for the low number of properties that are for sale is likely to heat up in coming weeks as the Ukraine-Russia conflict slows any potential increase in mortgage rates, Redfin said.

Home prices rose 16% year-over-year to $363,975 for the four-week period ended Feb. 27. That is the biggest annual gain in price since August.

In addition, 44% of homes sold above list price, up from 35% a year earlier and 21% in 2020. Properties sold at 0.8% over their listing price, the largest premium since October. That’s a result of the housing shortage, Redfin said. Active listings fell 24% year-over-year, dropping to an all-time low of 456,000 and were down 50% from the same period in 2020.

Rate movements have been volatile in the past week, which may encourage some buyers to wade into the tough market. The 10-year Treasury yield — the benchmark for the 30-year fixed rate mortgage — closed at a 15-basis-point drop from the day before on Feb. 28. It dropped another 13 bps the following day and regained 16 bps on March 2, but slipped back down 2 bps on March 3.

As of 10:30 am on March 4, it was down another 13 bps to 1.73%, the lowest point since the end of January.

“The war in Ukraine has rattled the global economy, causing mortgage rates to fall after weeks of increases,” said Redfin Deputy Chief Economist Taylor Marr, in a press release. “The dip in mortgage rates should buoy homebuying demand temporarily, fueling continued price gains.”

But in the short term, rates may rise if the officials follow through on measures targeting inflation.

“Demand may drop off if the Federal Reserve raises interest rates again as expected,” Marr said.

That effect may be more emotional on the part of buyers, as the Fed does not control movements in the 10-year Treasury and it can and has, along with mortgage rates, shifted in the opposite direction.

The median asking price of newly listed homes increased 15% from the same week in 2021 to an all-time high of $390,488; that is 27% higher from the same time in 2020.

The monthly mortgage payment based on the median asking price home was $2,018 at the current 3.76% mortgage rate. This was up 23% over this week in 2021, when mortgage rates were 3.02%, and up 36% from the same period in 2020, when rates were 3.29%.

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