Home Sales Post Rare May Decline as Mortgage Rates Rise

Redfin reports home sales fell in May for only the second time on record, while home prices saw the smallest May increase on record

(NASDAQ: RDFN) — Home prices rose 1.5% month over month in May, their smallest increase of any May in Redfin’s records, which go back to 2012, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

The housing market cooled considerably as mortgage rates climbed to their highest levels since 2009. Seasonally-adjusted home sales fell 3% month over month, their only May decline on record outside of 2020, when the start of the pandemic sent shockwaves through the housing market. Despite this decline in demand, the inventory of homes for sale still fell from a year earlier. As the market remains tight and new listings also decline, May saw the smallest drop in active listings since November 2019.

“The sudden and dramatic surge in mortgage rates has been a shock to the system for housing,” said Redfin chief economist Daryl Fairweather. “With inflation still at 40-year highs, mortgage rates are likely to stay elevated for a while, so the market will have to adjust to this new reality. The good news is that cheap debt is no longer fueling unsustainable home price growth, and existing homeowners are in a good position, holding record high home equity with debt financed at record low mortgage rates. Homebuyers however are facing mortgage rates near 6%, which means the housing-market slowdown will likely continue into the fall, but one silver lining is that homebuyers are facing less competition for the first time in two years.”

May Highlights

Metro-Level Highlights

Competition

• Indianapolis was the fastest market, with half of all homes pending sale in just 4 days, the same as a year earlier. Denver, Omaha, NE, Oklahoma City and Portland, OR were the next fastest markets, with 5 median days on market.
• In San Jose, CA, 84.5% of homes sold above list price, more than any other metro Redfin analyzed. Next came 83.6% in Oakland, CA, 79.3% in Worcester, MA, 76.3% in San Francisco, and 76.0% in Rochester, NY.

Prices

• North Port, FL had the nation’s highest price growth, rising 30.5% since last year to $475,000. Tampa, FL came next at 28.1%, followed by Las Vegas (26.8%), Knoxville, TN (25.9%), and Orlando, FL (25.8%).
• No metros saw price declines in May.

Sales

• Honolulu led the nation in year-over-year sales growth, up 5.0%, followed by Denver, up 4.0%. El Paso, TX rounded out the top three, with sales up 3.7%.
• West Palm Beach, FL saw the largest decline in sales since last year, falling 25.5%. Next came Lake County, IL (-22.9%) and Anaheim, CA (-22.4%).

Inventory

• Elgin, IL had the highest increase in the number of homes for sale, up 35% year over year, followed by Chicago (18.9%) and Austin, TX (15.6%).
• Allentown, PA had the largest decrease in overall active listings, falling 46.3% since last May. It was followed by Greensboro, NC (-35.2%), Bridgeport, CT (-31.6%) and Hartford, CT (-29.3%).

Redfin Estimate

• Miami (48.4%) had the largest share of homes predicted to sell for below list price, according to Redfin Estimate data, followed by Baton Rouge, LA (40.6%) and Tulsa, OK (40.0%).
• Sacramento, CA (90.8%) had the largest share of homes predicted to sell at or above list price, followed by Oakland (90.1%) and Worcester (89.6%).

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-market-may-home-sales-decline/

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.

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