Manage episode 297595130 series 2394432
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Kathy Fettke [Speaker]: It looks like the sellers are coming out of hiding. Redfin is reporting an increase in listings, and a new survey by Fannie Mae shows that more and more people feel that “now” is a good time to sell. (1) But there are also signs of a pullback among homebuyers.
Hi I’m Kathy Fettke and this is Real Estate News for Investors.
It’s been a sellers’ market throughout the pandemic, as buyers compete for a dwindling supply of existing homes. But now that the pandemic is easing and home prices have hit record highs, sellers are more motivated to put their homes up for sale.
New Listings Jumped in June
Redfin says new listings jumped 4% in June, compared to June of last year. That’s the biggest increase since 2019, before the pandemic. But the total number of active listings is still well below levels they were at a year ago. CNBC reports they are off by 32%. But that’s also the smallest year-over-year drop since February. (2)
A monthly Fannie Mae survey shows strong seller optimism. 77% of the participants said “now” is a great time to sell. Home prices have reached record highs, and sellers want to capture some of that appreciation. According to CoreLogic, prices were up 15.4% year-over-year in May. They are expected to continue rising, but not as fast. CoreLogic is predicting another 3.4% gain by May of next year.
Many homes also sell well above their listing prices as buyers make high offers and compete with other buyers. In June, 55% sold above the listing price compared to 27% in June of last year. But it’s that kind of price growth that is also pushing some buyers out of the market. The same Fannie Mae survey shows that 64% think it’s a bad time to buy.
CoreLogic CEO, Frank Martell says: “First-time buyers are hitting a wall in many places around the country as the pace of home-price rises outpace the benefits of lower borrowing costs. Younger and first-time buyers, including younger millennials, are faced with the challenge of having sufficient savings for a down payment, closing costs and cash reserves.”
While sellers are revving their engines, some buyers are downshifting. The pullback is showing up in the pending sales report. Redfin says: “Pending sales posted their smallest year-over-year increase in almost a year, and fell twice as fast month-over-month as they did during this same time in 2009.”
The Redfin Homebuyer Demand Index is based on requests for home tours and other agent services. It recently fell 1.2% week-over-week. There was also a similar drop in mortgage applications.
Redfin’s Chief Economist Daryl Fairweather says: “Many buyers have backed away from the housing market and are waiting until more and better homes are listed.” He says: “They don’t have the same sense of urgency that they did at the beginning of the year.”
Sellers Have the Upper Hand
But even with a pullback in demand, the experts say it’s still a seller’s market. According to Fannie Mae’s chief economist, Doug Duncan, sellers will continue to have the upper hand. He says: “Despite the pessimism in home buying conditions, we expect demand for housing to persist at an elevated level through the rest of the year.”
He attributes that to mortgage rates that are still hovering below 3%, along with consumer confidence about the job market and household income.
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Thanks for listening. I’m Kathy Fettke.