Redfin Reports Nearly 1 in 5 Sellers is Dropping Their Price, the Highest Rate Since October 2019
(NASDAQ: RDFN) —The housing market is sending clearer signals that the pandemic-driven housing frenzy is coming to an end, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.
Nearly one in five (19.1%) home sellers dropped their price during the four week period ending May 22—the highest level since October 2019. Measures of competition including the typical listing’s time on market, the share of homes pending sale within one week and the share of homes sold above list price have all plateaued. Mortgage-purchase applications were at a level on par with June 2020, and the number of homebuyers touring and offering on homes, as measured by the Redfin Homebuyer Demand Index, posted its largest annual decline since April 2020.
“The picture of a softening housing market is becoming more clear, especially to home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates,” said Redfin Chief Economist Daryl Fairweather. “For now, mortgage rates have stabilized, and I expect prices to do the same. This will remove some uncertainty for buyers. That means that as long as a home is priced conservatively, it still has a good chance of selling quickly.”
Leading indicators of homebuying activity:
- Fewer people searched for “homes for sale” on Google—searches during the week ending May 21 were down 13% from a year earlier.
- The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 12% year over year during the week ending May 22. This was the largest decline since April 2020 when the pandemic paused most homebuying activity.
- Touring activity from the first week of January through May 22 was 29 percentage points behind the same period in 2021, according to home tour technology company ShowingTime.
- Mortgage purchase applications were down 16% from a year earlier, while the seasonally-adjusted index was flat week over week during the week ending May 20.
- For the week ending May 26, 30-year mortgage rates decreased slightly to 5.1%.
Key housing market takeaways for 400+ U.S. metro areas: