A recent report by Redfin states that the Spring homebuying season, usually the most active of the year, has been hampered by a severe lack of housing inventory and high mortgage interest rates. The four-week period ending on May 7 saw a 19% decrease in new listings compared to the same period last year. Pending home sales also experienced a decline, with a 16% drop compared to last year. This indicates that both homebuyers and sellers continue to be affected by mortgage rates exceeding 6%.
Despite the perception of a hot market created by the scant amount of homes for sale, buyers who are willing to pay more for mortgages face intense competition for the few homes on the market.
“This spring’s housing market is hot but cold, with scant listings making it less active than usual but fast and competitive at the same time,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “The good news is that buyers are out there, trying to find a seat in a game of musical chairs. The bad news is there aren’t enough chairs.
Taylor also mentioned that the housing market is not expected to improve until mortgage rates fall to a level that current homeowners would be willing to trade in their 3% rate for. However, this is unlikely to happen anytime soon, as although inflation is steadily coming down from last year’s record-high levels, it’s still above target.
In contrast to the national housing market, Austin Redfin agent Gabriel Recio said in a recent report that demand for homes has increased, causing inventory to rise and competition to decrease.
The Federal Reserve has raised interest rates for the tenth time since December 2015, as it wages its war on inflation. However, recent bank failures and a potential debt ceiling showdown have caused the central bank to signal that it may be raising rates for now.
What do you think of this recent report? Stay tuned for our upcoming blog posts, where we’ll give you the latest market trends and insights to empower you in your real estate journey.
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