As homebuyer demand slows, potential sellers are becoming more hesitant about listing their homes. During the four-week period ending on August 7, the number of new listings fell 12% year over year, according to a report published by Redfin on Thursday. This is the steepest decline in new listings since June 2020.
Observers attribute the decline in new listings to sellers’ awareness of diminishing housing demand, as well as their trepidation of obtaining a new mortgage in this rising mortgage rate environment.
Despite the drop in new listings, the overall housing supply rose 4% during the four-week period, as homebuyer demand slows, and properties sit on the market longer. A year ago, 45% of homes had an accepted offer with in the first two weeks on the market and 31% had an accepted offer within one week. This year, those metrics have dropped to 38% and 26%, respectively. In addition, the median number of days on the market was up to 22 days, compared to 20 days a year prior.
“Buyers are backing off due to rising housing costs and sellers are holding back because they realize they won’t get the bidding war they would have gotten six months ago,” Taylor Marr, Redfin’s deputy chief economist, said in a statement. “The good news is this is bringing balance to the market. If mortgage rates resume their downward trajectory, more buyers and sellers could get back in the game.”
Another sign of a slowing market is the drop in home price growth. According to Redfin, home prices were up 8% year over year during the four-week period to a median sales price of $379,089. This is a 4.1% drop from a high of $395,500, set during the four-week period ending June 19. Two metros, Oakland, California and San Francisco actually saw year over year declines in median sales price, with prices falling 1.5% in Oakland to a median of $940,994, and dropping 2.4% in San Francisco to $1.5 million.
In addition, only 43% of homes sold above list price, compared to 52% a year ago, with the sale-to-list price ratio coming in at 100.6%, down from 101.7% a year prior. However, with just 44.3% of home offers written by Redfin agents facing competition in July, marking the lowest share of record, except for April 2020, at the onset of the pandemic, these decreases are to be expected.
“Sellers should make sure their home is move-in ready and not overpriced,” Brynn Rea, a Spokane, Washington-based Redfin agent, said in a statement. “They should do everything possible to make their property pristine for the masses—invest in updates and make it feel fresh. Doing little things like replacing faulty faucets or painting walls will help sell a home more quickly.”