Excerpt from full article:
Sellers are coming back to the housing market. The number of homes newly listed for sale surpassed 2019 levels for the first time since the start of the year during the four weeks ending July 4. Despite a long-awaited increase in the supply of homes for sale, homebuying demand continued to slip, leaving the market feeling a few degrees cooler.
Pending sales posted their smallest year-over-year increase in almost a year, and fell twice as fast month over month as they did during this same time in 2009. The Redfin Homebuyer Demand Index—a measure of requests for home tours and other services from Redfin agents—also fell 1.2% week-over-week, and there was a similar decline in mortgage purchase applications.
Despite the softening, the housing market is still very much tilted in sellers’ favor. Home prices are at record highs and more than 20% above the level they were a year earlier, and homes continued to sell faster than ever, with the typical home lasting just 15 days on the market. However, days on market have been flat for the past four weeks after falling for 18 straight weeks between February and June, and the share of homes sold above list price has flatlined after sharply rising over the same period.
Seems like the market is consolidating somewhat and the explosive price growth, emotional driven period where even garbage properties were selling for 30% over asking is now over. It’s very much still a seller’s market and desirable homes are still hot, but I think we’ve found out the maximum of what the market can bear, at least for the near future.
Looking at all the near term external factors (falling lumber price, eviction moratorium ending, exhausted buyers hitting their financial limit, increasing inventory from sellers trying to catch the last bus of the price spike, and most importantly, Covid-driven emotions cooling off) the market is unlikely to see anywhere close to the price increase we saw earlier this year, at least not in the short term.