While sales of luxury homes dropped 16.3%, sales of most affordable homes rose 11.3% year over year
(NASDAQ: RDFN) — Sales of the most affordable homes in the U.S. rose 11.3% year over year in the fourth quarter of 2021, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Meanwhile, sales of luxury homes dropped 16.3%.
Sales of affordable homes are on the rise as the job market strengthens, especially for lower-wage workers, and real estate investors buy a record share of U.S. homes. At the same time, inventory in the most affordable price tier is up as the end of pandemic-driven mortgage forbearance and foreclosure moratorium policies encourages Americans to put their homes on the market.
“The market for homes at lower price points is booming for a few reasons. Not only is there demand from workers who are now earning higher wages, but investors, who have an appetite for lower-priced homes, are buying up properties at record rates,” said Redfin Chief Economist Daryl Fairweather. “And with the end of both mortgage forbearance and the foreclosure moratorium, many homeowners who don’t have much cash in the bank are choosing to sell their homes to clear their mortgage debt, providing plenty of supply to meet the high demand.”
For luxury homes, the big year-over-year sales drop is partly due to a surge during the fourth quarter of 2020, when affluent Americans took advantage of low mortgage rates and remote work to buy high-end homes. Sales are also constrained by a lack of supply. Luxury sales are still elevated above pre-pandemic levels—sales were up by nearly 27% from the last quarter of 2019 to the last quarter of 2021—but the initial pandemic-driven frenzy for high-end homes is calming down.
U.S. Housing Market Summary, Q4 2021 |
|||||
|
Luxury |
Expensive |
Mid-Priced |
Affordable |
Most Affordable |
Homes sold, YoY change |
-16.3% |
-9.6% |
-4.8% |
2.8% |
11.3% |
Number of homes for sale (active listings), YoY change |
-21% |
-14.7% |
-10.8% |
-1.9% |
18.6% |
Number of new listings, YoY change |
-7.1% |
-8.3% |
-7.5% |
4.4% |
31% |
Median sale price |
$1,038,200 |
$470,000 |
$310,000 |
$215,600 |
$127,500 |
Median sale price, YoY change |
17.3% |
15.8% |
18.8% |
16.5% |
10.9% |
Median days on market |
39 (-18 YoY) |
26 (-9 YoY) |
22 (-5 YoY) |
24 (-4 YoY) |
28 (-6 YoY) |
Supply is up for affordable homes, down for luxury homes
The number of the most affordable homes for sale rose 18.6% in the fourth quarter, making it the only tier to experience an inventory increase. Supply of luxury homes fell 21% during the same time period, the biggest drop of all five price tiers.
The uptick in affordable homes for sale is partly because of owners putting their homes on the market due to the end of mortgage forbearance and the foreclosure moratorium. New listings of the most affordable homes rose 31% year over year in the fourth quarter, while new listings in the other tiers either declined or grew by less than 5%.
“Some experts were worried the end of forbearance would cause a glut of housing supply and eventually lead to a housing-market crash, but there’s plenty of demand to snap up the inventory,” Fairweather said. “The fact that both supply and sales of the most affordable homes shot up at the end of 2021 is solid evidence of that.”
Sale prices continued to rise in every segment of the market
Sale prices increased by double digits in all five tiers as home prices soared throughout the country in response to a shortage of supply and relatively low mortgage rates.
The median sale price for mid-priced homes jumped 18.8% year over year to $310,000, the biggest increase of all the price tiers. Prices of luxury homes increased 17.3% to about $1 million, while prices of the most affordable homes rose 10.9% to $127,500.
Homes are selling faster than a year ago
The typical luxury home for sale during the fourth quarter spent 39 days on the market, 18 fewer days than a year earlier. The most affordable homes spent less time on the market (28), as is typical for lower-priced homes. That’s six fewer days than the year before.
The severe supply shortage in the luxury market is one cause of high-end homes picking up speed quicker than their more affordable counterparts. With a major dip in the number of luxury homes for sale, there’s more competition for the ones that are available.
To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/luxury-price-tier-report-q4-2021
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220127005346/en/
Contacts
Redfin Journalist Services:
Ally Braun, 206-588-6863
press@redfin.com
