The latest report from Redfin attests to one of the most competitive housing markets on record: as housing prices rise at the fastest rate in years, prospective buyers have become less likely to invest in real estate, resulting in a diminishing rate of home sales in the past month.
According to Redfin’s data, seasonally-adjusted home sales fell by 4 percent in March alone while median home-sales prices rose by 6.2 percent over the same period. This latter figure marks the highest March increase in home prices since 2013.
Also in March, the year-over-year rise in home prices reached 17.3 percent, with a median sale price of $412,700.
The report noted that many of the most severe sale price increases were in the Sun Belt metros, which have boomed in recent years. Tampa, Florida, saw the most severe rise in prices at 29 percent, with Phoenix, Arizona, and McAllen, Texas, following close behind at 27 percent.
These rising prices have caused home sales to slump, as home ownership becomes prohibitively expensive for many buyers in the current market. In addition to the 4 percent decline from February, the March report noted that sales had declined by 8 percent from the same time last year. Redfin also attested to a 13 percent decline in seasonally adjusted active listings, making for an all-time low in this metric.
“Although pricey coastal markets began showing early signs of a slowdown in late March, nationwide sales data for the full month reflects the hottest March market on record, since homes that sold last month mostly went under contract in February,” Redfin chief economist Daryl Fairweather said in a statement.
“We expect the combination of surging mortgage rates and record-high home prices to cause more homebuyers to drop out of the market. Unfortunately, homeowners are turning their back on the market too. Instead of being motivated to list before prices weaken, potential home sellers may be choosing to wait-out the impending market cooldown.”
These fears of price instability have resulted in a strange form of paralysis: continually skyrocketing prices are met with a reluctance among owners to list their homes for sale, as many are wary that the current bull market will not outlast the time it takes to sell their homes. At the same time, buyers find themselves less and less able to meet the financial demands of the real estate market.
