Sellers are getting worried that they could miss the home buying frenzy and are consequently accelerating their timelines to try and sell up before demand softens too much. As home inventory is a variable factor in today's real estate market.
There are some important signs that the real estate market is slowing across the U.S. Data shows that both existing home and new homes sales have declined recently, while pending home sales are also lower, according to the latest index that tracks these things.
Moreover, we’re seeing more homes on the market. The inventory of for-sale homes jumped 9% last week compared to one year ago, according to realtor.com. New listings have grown at almost double the rate they were coming onto the market in the last four weeks, compared to the year before.
Redfin’s chief economist Daryl Fairweather told CNBC that rising mortgage rates are the main factor behind the shift in real estate markets. Due to the cost of mortgage payments going up, sellers are now in a hurry to find a buyer before demand weakens and they find themselves unable to sell, she said.
Another sign of the slowing market is that pending home sales fell for the sixth straight month in April, and are now at the slowest pace in almost ten years, the National Association of Realtors said last week.
Home sellers also report seeing less competition from buyers. A Redfin index that measures buyer demand, based on requests for home tours and home buying services, was down 8% annually on May 15, the largest decline that index has seen since April 2020, when the COVID-19 pandemic put everything on hold.
In addition, one in five sellers have dropped their asking prices, the highest rate since October 2019, Redfin said.
“We used to get 10 to 15 offers on most houses,” Lindsay Katz, a Redfin real estate broker based in Los Angeles, told CNBC. “Now I’m seeing between two and six offers on a house, a good house.”