A growing number of homebuyers are backing out of the housing market as elevated mortgage rates continue to put a dent in housing affordability, but those who remain are buying up homes at a record pace, according to Redfin. The average home for sale found a buyer in just 15 days during the four-week period ending May 8, marking the fastest rate of home sales on record. Meanwhile, pending sales dropped 6% year-over-year and mortgage purchase applications also fell 8% from a year earlier.
A drop in buyer activity is the result of record high median home sale prices resting around $397,356, as well as higher monthly mortgage payments, which most recently reached $2,427 at the current 5.3% mortgage rate.
“Rising mortgage rates have taken a notable bite out of demand,” said Redfin Chief Economist Daryl Fairweather. “But still, homebuyers who remain in the market are facing stiff competition, especially for the most desirable homes. Given the lack of homes for sale, it would take a much larger drop in demand for buyers to really feel like the market has truly turned in their favor.”
The share of homes for sale with price drops shot up to a seven-month high of 16% during the four-week period as early-stage homebuying demand as measured by Redfin’s Homebuyer Demand Index in the latest week fell 7%—the largest annual decline since April 2020.
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