Last month saw one of the lowest levels of home sales ever recorded by Redfin, the real estate brokerage reported.
According to Redfin data, there were only 407,959 homes sold (seasonally adjusted) in May, down 1.7% month over month and 2.9% year over year. Just two months this decade have seen fewer residential properties change hands: October 2023, when mortgage rates vaulted to their highest level in 23 years, and May 2020, when virtually everything in the country ground to a halt because of the stateside onset of the COVID-19 pandemic.
Mortgage rates are nowhere near where they were this past October, when they hit 7.62%, per Federal Reserve Economic Data (FRED). But they did inch above 7% again, per Fred, with the average 30-year fixed rate at 7.06% for the month. That’s up from 6.99% in April and 6.43% in May 2023.
Couple that with a median home price that climbed 5.1% year annually to hit a record-high $439,716 in May, and you’ve got a recipe for a rough market for homebuyers, said Elijah de la Campa, Redfin senior economist.
“Buyers today are facing many of the realities of a hot market even though few homes are changing hands,” de la Campa said. “Sales are sluggish because high homebuying costs are making both house hunters and prospective sellers skittish. And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs.”
The market is oddly bifurcated geographically, with competition red hot in some areas while sellers in other places are having to lower their prices after initially listing too high, leaving their properties unbought on the market. Per Redfin data, the typical home for sale in May spent 32 days on the market — comparable to May last year, but longest for any May since the pandemic began.
Almost one out of every five (19.2%) homes for sale saw a May price cut, according to Redfin. That’s up from 13.2% and close to the record high of 21.7% seen in October 2022.
More than 48% of listings had a price drop in Indianapolis, higher than any other major metro tracked by Redfin. Price reductions are also growing prevalent in Florida and Texas, where more homes are being built than anywhere else in the country and supply is rising quickly. Of the 10 metros with the highest shares of price drops among all listings, three were Florida and three were in Texas.
