Buyers' Sense of Urgency Dwindles, Bringing Relief to Market

Active listings are down 32% compared to one year ago, but that’s a significant improvement for the sizzling housing market. Despite the seemingly dramatic drop of listings, this marks the smallest annual dip since early February, and active listings are up 8% compared to 2021’s record low in May. Redfin’s chief economist told CNBC that buyers backed away from the market in hopes more listings will be added. The sense of urgency buyers had earlier this year has faded due to stabilized home prices. Mortgage rates brought relief to buyers last week, dropping below 3%. 

A monthly housing sentiment survey in June from Fannie Mae found that 64% of respondents said it’s a bad time to buy a home, up from 56% in May. On selling, 77% of respondents said it’s a good time to sell, up from 67% in May.

Potential sellers had been holding properties off the market, not wanting people coming through their homes while the pandemic was raging. They were also concerned they wouldn’t be able to find something else to buy.

Vaccines, as well as rising inventory, are giving them more confidence, not to mention that they can now sell for top dollar. A record 55% of homes sold above listing price in June, up from 27% the year before.

Home prices were up 15.4% in May compared with May 2020, according to CoreLogic. Prices, however, are projected by CoreLogic economists to increase 3.4% by May 2022, as affordability challenges hit some buyers and cause a slowdown in price growth.

“First-time buyers are hitting a wall in many places around the country as the pace of home-price rises outpace the benefits of lower borrowing costs. Younger and first-time buyers, including younger millennials, are faced with the challenge of having sufficient savings for a down payment, closing costs and cash reserves,” said Frank Martell, president and CEO of CoreLogic.

Read More