The number of homes for sale jumped 12.5% ​​in a month because “it’s now a buyer’s market”

The number of homes remaining for sale for 30 days or more has increased by 60% in some areas, with a 12.5% ​​increase in July compared to last year, as experts say the United States is turn to a buyer’s market.

About 61.2% of homes listed for sale have been on the market for at least 30 days, up from 54.4% in July 2021, according to a new Redfin report.

Among the major cities with the most homes remaining on the market from a year ago were Oakland, at 60.7%; Phoenix at 54.4%; and Austin at 50.9%; while Fort Lauderdale, Florida was the only city to see a 0.9% decline.

Redfin economists said homes have been staying on the market longer due to the housing market’s response to rising mortgage rates and federal interest rates, forcing buyers to slow down and consider their choices.

“Buyers can take their time to make prudent decisions about homes without worrying so much about bidding wars, bids above asking price and waivers of contingencies,” wrote Redfin Deputy Chief Economist Taylor. Marr, in the report.

“It’s a different story for sellers, who have spent the past two years hearing about homes from neighbors receiving multiple offers on their day of sale. Now they have to lower the price and get back to the basics of selling a home, like staging and improving the paint, to get buyers’ attention.

The change follows dramatic interest rate hikes by the Federal Reserve since May as the market has yet to fully react to the latest hike in late July as the central bank said further increases are expected this year. in order to fight inflation.

Oakland, Phoenix and Austin saw the biggest increases in stale inventory, with Fort Lauderdale, Fla., the only major city to see a drop in July.

Oakland, Phoenix and Austin saw the biggest increases in stale inventory, with Fort Lauderdale, Fla., the only major city to see a drop in July.

The number of homes listed for sale for 14 days, 30 days and 60 days or more all increased for the first time since the start of the pandemic

The number of homes listed for sale for 14 days, 30 days and 60 days or more all increased for the first time since the start of the pandemic

What Home Buyers and Sellers Need to Know: How the Fed Influences Mortgage Rates

The Fed does not set mortgage rates.

When you hear about the Fed “raising rates”, it means that it has raised its target range for the fed funds rate.

In July, the Fed raised its target from 0.75% to 2.25-2.5%. This was the fourth in a series of hikes that started in March.

Changes in the federal funds rate affect borrowing costs across the economy, particularly in the housing market.

When the Fed raises its target rate, mortgage rates generally follow.

Mortgage lenders determine borrowing costs based on inflation and interest rate expectations.

Both are up right now, so we’ve also seen mortgage rates go up.

The average 30-year fixed rate mortgage was 3.3% in the first full week of 2022, according to the Mortgage Bankers Association. In May, it had reached 5.36%.

Expect it to keep rising as the Fed continues to climb.

July 2022 marks the first year-on-year increase in the supply of ‘rundown’ housing since the start of the pandemic, with Redfin defining stale homes as homes that were on the market for at least 30 days without concluding of contract.

It is also the second largest increase in a decade, only beaten by a 13.9% rise in April 2020, when the housing market ground to a halt due to COVID.

Redfin also found that the number of homes listed for sale for more than two weeks and more than two months were also up from a year ago, rising 7.6% and 6.8% respectively.

The supply of stale homes comes after a sellers’ year where competition was fierce and homes soared off the market. In July 2021, the typical house was under contract in just 15 days, according to Redfin.

The rush to buy a home has been driven primarily by low mortgage rates and the Federal Reserve dropping interest rates to near zero amid the pandemic.

The average 30-year fixed rate mortgage was just 3.3% in the first full week of 2022, according to the Mortgage Bankers Association.

Those conditions have since reversed, with the Fed raising rates by near-record percentage points in an effort to combat runaway inflation, which hit 9.1% in July.

As interest rates rose, mortgage rates followed suit, reaching nearly 6% in July before stabilizing at around 5% on August 4.

Christopher Johns, a Redfin real estate agent based in Houston, Texas, confirmed that the market has seen a complete turnaround.

“The market took a 180 degree turn from early spring to late spring as buyers retreated due to high mortgage rates,” he said.

“A lot of sellers tell me they feel like they’ve missed out on the hot market.”

30-year fixed-rate mortgages averaged around 5% as of Aug. 4, marking its second week of declines despite Fed rate hikes

30-year fixed-rate mortgages averaged around 5% as of Aug. 4, marking its second week of declines despite Fed rate hikes

Federal interest rates have been cut to near zero to help the country through the coronavirus pandemic.  The Fed started raising rates in March 2022

Federal interest rates have been cut to near zero to help the country through the coronavirus pandemic. The Fed started raising rates in March 2022

US inflation hit a 41-year high of 9.1% in June

US inflation hit a 41-year high of 9.1% in June

Stale inventory saw the biggest increase in Oakland, Calif., where the number of homes for sale that remained on the market for 30 days or more rose 60.7% from a year ago.

In Phoenix, stale inventory is up 54.4% since 2021, and in Austin it’s up 50.9%.

The other major cities that made up the Top 10 were Anaheim, Calif., at 49.7%; Riverside, California, at 46.7%; Fort Worth, Texas, at 43.4%; Dallas at 42.9%, Washington DC at 42.5%, Sacramento, CA at 41.7%; and Seattle at 41.3%.

Fort Lauderdale, Florida was the only major US city to see a drop in stale inventory, with a drop of almost 1%.

Experts said the rise in stale inventory should stabilize soon and better reflect what the housing market was like in the pre-pandemic era.

Johns said he reiterates this to his clients: “I remind potential sellers that we are not in a real estate crash; it is a corrigendum.

“If sellers list their home for a slightly lower price than they would have five months ago, they are still likely to get a strong offer.

And my advice to buyers is to remember that 5% rates are not the end of the world; they can always refinance in the future if rates go down.

Lack of affordable options is driving down US home sales.  The fastest declines in newly pending sales from May to June occurred in San Jose (-24.3%), Seattle (-23.9%) and Salt Lake City (-20.8%).

Lack of affordable options is driving down US home sales. The fastest declines in newly pending sales from May to June occurred in San Jose (-24.3%), Seattle (-23.9%) and Salt Lake City (-20.8%).

The largest share of US home sellers live in the South (39%), followed by the Midwest (23%) and the West (22%).  The smallest share lives in the Northeast (15%).  The South historically has more home construction and inventory than other regions

The largest share of US home sellers live in the South (39%), followed by the Midwest (23%) and the West (22%). The smallest share lives in the Northeast (15%). The South historically has more home construction and inventory than other regions

The shift to a buyer’s market is expected to lower U.S. home prices, with Redfin and Zillow suggesting the decline will be felt where markets were hottest.

Redfin predicts that Riverside has the greatest chance of seeing its housing market cool further if the United States enters a recession.

Number two on their list is Boise, Idaho, followed by Cape Coral, Florida; North Port, Florida; Vegas; Sacrament; Bakersfield, California; Phoenix; Tampa, Florida; and Tucson, Arizona.

A recent report from Zillow showed competition in hot markets like San Jose; San Francisco; Seattle; and San Diego – all among the top five most expensive cities in California.

Salt Lake City at 24.1%, Sacramento at 21.7% and Phoenix at 20.4% are seeing the highest shares of price cuts.

Nationally, home price appreciation slowed for the third consecutive month in June. Zillow credits “affordability barriers” as the likely reason behind this.

Zillow also found that most sellers were listing homes in the South, accounting for 39% of the market, followed by the Midwest at 23% and the West in third place at 22%.

Sellers from the Northeast accounted for only 15% of the market.

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