Is the red-hot housing market starting to cool?
The fast-paced housing market of the past year may be slowing slightly in the face of price spikes and a dearth of homes for sale across the country. It’s too soon to say that the market is truly slowing, but data analysis from both Realtor.com and Redfin real estate brokerage recently found that while home prices are still rising, they’re rising at a slower pace than in recent months.
According to Realtor.com, the median national price for active listings grew 15.2 percent in May 2021 compared with May 2020 to $380,000, a record high. However, that pace of growth in May was lower than the 17.2 percent increase in April year-over-year and is the first time the annual growth rate has slowed in 13 months other than in February, which was affected by extreme weather.
When drilling down to the largest metro areas in the country, active listing prices grew an average of 7.4 percent in May 2021 compared with May 2020, lower than the growth rate of 11.6 percent in April. Regionally, listing prices increased the most in Western markets (13.3 percent), compared with 8.2 percent in Southern markets, 5.9 percent in Northeastern metro areas and 1 percent in Midwestern metro areas.
The median list price in the D.C. metro area, $510,000, was the same in May 2021 compared with May 2020. The metro areas with the sharpest listing price increases in May were Austin (32.2 percent), Riverside, Calif., (21.5 percent) and Las Vegas (18.5 percent).
Redfin Analysts pointed out a few other indications that the housing market may be returning to a more normal pace, such as the decline of pending sales by 3 percent for the four-week period ending May 2, compared with a 2 percent increase during that same period in 2019. (Pending sales were up 38 percent compared with that period in 2020, but that was during the initial phase of the pandemic when the housing market was nearly at a standstill.) Active listings fell 37 percent during that same four-week period compared with 2020.
Mortgage applications for a purchase declined during three of the five weeks ending between April 30 and May 28, down by 3 to 4 percent each week and rising just 1 to 2 percent during the other two weeks, according to data from the Mortgage Brokers.
In addition, while homes continue to sell in a record low of just one or two weeks on the market, that pace of sales has been relatively flat since the beginning of March, according to Redfin.
Record-breaking housing market
While these signs indicate a slight softening of the housing market, Redfin’s data shows multiple record-breaking metrics that demonstrate just how hot the market has been.
In May, Redfin reported a median home sale price of $355,558, a record price that was also a record 24 percent over May 2020. More than half of homes (52 percent) sold for more than their list price, up from 26 percent in May 2020. Homes sold for 2 percent above their list price in May 2021 compared with 1.5 percent below the asking price in May 2020.