The evidence keeps pouring in: Fewer sales. More days on the market. Fewer bidding wars. Fewer offers above the asking price.
Yes, the housing market is continuing its about-face.
Home sales dropped 35.1 percent year-over-year in November, according to Redfin — the largest drop recorded by the brokerage since it began tracking sales in 2012.
There were other signs of a cooling housing market in Redfin’s report. The median home sale price increased by only 2.6 percent from a year earlier, the smallest gain since May 2020, when several pandemic-related factors set the market ablaze.
New listings dropped precipitously, falling 28.4 percent year-over-year. Outside of April 2020, when the market paused during pandemic shutdowns, it was the largest decline in new listings ever recorded by Redfin.
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Fifth straight monthly decline in pending home sales
Redfin attributed the decline in sales to a mortgage rate surge, which has reversed a bit, giving hope to prospective buyers and sellers. The average 30-year fixed mortgage rate exceeded 7 percent in November, but has sunk back to about 6.5 percent.
The Federal Reserve slowed interest rate hikes in December, but the inflation battle isn’t over, which could keep mortgage rates swinging wildly depending on the Fed’s actions, bond yields and various economic indicators.
Redfin researcher Chen Zhao (JP Morgan Chase & Co)
“We have a ways to go until we reach recovery mode, and we may see sales continue to ebb in the short term,” Redfin’s Chen Zhao stated.
Among U.S. markets, year-over-year home sales dropped the most in Las Vegas. San Jose, in the notoriously tight Silicon Valley housing market, was the only other city where sales fell by more than 50 percent.
San Jose was also one of 11 metros with year-over-year declines in median sale price; San Francisco’s fell the furthest.
Sales in which a Redfin agent reported at least two competing bids accounted for 40.4 percent of the total, a steep decline of 27 percentage points year-over-year. The share of homes sold above the listing price fell 18 percentage points to 26.4 percent.
And buyers in November had more time to act, as homes’ median number of days on the market rose to 37 from just 22 a year ago.
A separate report from House Method calculated the median number of days on the market for major metro areas. Sales were slowest in Greenville, South Carolina, in October: 85 days. Other markets in the top 10 included Palm Bay, Florida (67), Chicago (61), New York City (57) and Miami (54).