U.S. Home Prices Reach Record High Despite Slow Market
Amid a broader market slowdown, U.S. home prices reached a historic peak in April, with the median sale price rising to $433,558, a 6.2% increase from the previous year, according to data issued by Redfin.
The rise in home prices suggests a lack of housing inventory coupled with the reluctance of homeowners to list their properties. Even as new listings slightly increased, they remained about 20% below pre-pandemic levels, Redfin said, leaving potential buyers grappling with high prices and the additional challenge of rising mortgage rates, which continue to hover near a two-decade high.
"It's not all bad news for homebuyers," Redfin Economics Research Lead Chen Zhao noted in the report. "Mortgage rates are already inching lower in response to this week's inflation report, which signaled that the Fed may cut interest rates this summer — a possibility that just weeks ago many thought was off the table."
The demand and constrained supply continue to drive the U.S. housing market to a landscape where even a slow trend does not deter the ascent of home prices.
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In regions like San Jose, California and Rochester, New York, a competitive fervor remains, with a high portion of homes selling above the asking price. In April, 75.8% of homes sold in San Jose fetched more than their listed price, indicating a market that is defying broader slowdowns.
The trend is similar in Rochester, where 72.8% of homes sold above asking.
Conversely, markets that once ran hot with pandemic-fueled demand, like Las Vegas, are now seeing recalibration. "Most sellers in Las Vegas are willing to negotiate — anywhere from 5% to 10% off their list price," Premier real estate agent Fernanda Kriese said in the report.
"Sellers are offering buyers money for mortgage-rate buydowns, along with other concessions. Homes that are listed below market value get multiple offers and are snatched up in two to four days, but homes that are priced $5,000 to $10,000 over market value are sitting for 30 to 60 days longer," Kriese noted.
While the total number of homes for sale has reached a post-pandemic high, a portion of the inventory comprises properties that have been on the market for a long time due to being overpriced, Redfin noted. The situation has led to an increase in price reductions, with 18% of homes seeing cuts, up from the previous year.
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April saw a modest increase in new listings, rising 1.7% month-over-month and marking a 10.8% increase year-over-year; yet the figures still trail behind pre-pandemic levels. The reluctance to list is often attributed to homeowners being "locked in" by low mortgage rates obtained during the pandemic, disincentivizing them from selling in a higher rate environment.
Active listings, which reflect the total number of homes available for sale, also suggest that tension exists between supply and demand. While they increased by 0.3% from March to April and were up 7.5% from April last year, the total count remains markedly below the levels seen before the pandemic.
In contrast to the national cooling trend, certain local markets saw resilience or even showed aggressive growth. For example, San Jose and Rochester outperformed other regions, with a large portion of homes selling above the asking price.
In conclusion, Redfin real estate professionals anticipate that 2024 will continue to favor sellers, largely due to sustained price levels despite increased market challenges.
However, for buyers, the landscape presents opportunities to negotiate more favorable terms in markets where homes linger longer, Redfin said.
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