Hot buyers, cold sellers: An update on the spring housing market
Published Date: May 12, 2023
I’m Austin, CEO and co-founder of Pacaso.The housing market is picking up steam well into the spring home buying season. Although fewer homes than usual are being sold this spring, buyers are quickly snatching up those that are on the market — even when mortgage rates may be fluctuating. An uptick in mortgage applications indicates that people are optimistic about the market.Some things we’re seeing:
According to Zillow, the volume of new listings in April were down 28% compared to last April — one of the most significant decreases since the beginning of the pandemic. Homeowners are choosing to stay put and delay the decision to sell their homes due to rising mortgage rates, with the average 30-year mortgage rate increasing for the second week in a row. Furthermore, the difficulty in finding another home to purchase is also contributing to this trend. This lack of new listings is leading to an unseasonal reduction in the overall number of homes for sale. The limited supply of available homes is likely to play a significant role in maintaining or increasing home values, making it an important factor to consider in the current real estate market.
2. Fierce competition for desirable homes
The current state of the real estate market continues to be highly competitive, as evidenced by the fact that almost half (48%) of the homes sold in the four weeks ending on April 30th were under contract within two weeks according by Redfin. Although this is slightly lower than the rate of 51% observed a year ago, there are no indications of a slowdown so far this year. This spring, the scarcity of inventory is resulting in fewer homes being sold, but those that are going fast. The strong demand from buyers is driving up competition, making it challenging to secure a home, especially in sought-after locations.
3. Home prices rise for third consecutive month
According to a report originally obtained by CNBC, home prices rose by 0.45% from February to March, based on a seasonally adjusted Black Knight Home Price Index. This marks the third month in a row with an increase in home prices, after revisions to January and February data. However, limited inventory remains a significant challenge for the housing market, with new listings down 27% in February compared to pre-pandemic levels. This shortage of inventory is exacerbating the already challenging conditions in the housing market.
3. Homebuyers keep a watchful eye on fluctuating mortgage rates
According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage has slightly decreased to 6.39% in the past week following the recent instability in the banking sector and the Federal Reserve. Despite these minor changes and the continuous market fluctuations, housing market experts remain optimistic that interest rates have already reached their peak last year.Meanwhile, the Mortgage Bankers Association (MBA) reported that mortgage applications have increased in May. The MBA's Weekly Mortgage Applications Survey for the week ending May 5, 2023 showed that the Market Composite Index, which measures mortgage loan application volume, rose 6.3% on a seasonally adjusted basis from the previous week.We'll continue to check in with updates, and encourage you to contact us with any questions about a market of interest.
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