The number of homes for sale nationwide rose 2% in June, the first annual increase since July 2019, before the pandemic triggered a homebuying frenzy, which sent many would-be buyers into bidding wars, according to Redfin.
“The country’s economic woes have already cooled the housing market, and they’re likely to continue dampening demand,” Redfin Chief Economist Daryl Fairweather said in a press release. “The Fed has signaled it may increase interest rates further to combat stubbornly high inflation, which could harm consumer confidence, and lower stock prices mean fewer prospective homebuyers can afford a down payment.”
Fairweather continued, “I advise sellers to commit: If you decide to sell, do it quickly before demand potentially falls further. And price carefully — this is not the time to test the waters. You’ll do more harm than good if you overprice and have to do a price reduction or take the home off the market.”
Redfin notes that home sales fell nearly 16% from a year ago, the largest decline since May 2020, and home sale prices also declined, as the 11% year-over-year increase is the smallest in nearly two years.
Facing red-hot inflation and higher mortgage rates, some homebuyers are now backing out of deals — either to renegotiate them or because they can’t afford the mortgage anymore. In a report earlier this month, Redfin noted that in June, 60,000 home-purchase agreements fell through nationwide, or 15% of homes that went under contract that month, as GOBankingRates previously reported.
This is also reflected in the number of mortgage applications, which decreased 1.7% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 8, 2022.
“Mortgage rates were mostly unchanged, but applications declined for the second straight week. Purchase applications for both conventional and government loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook,” Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said in a press release.
“After reaching a record $460,000 in March 2022, the average purchase loan size was $415,000 last week, pulled lower by the potential moderation of home-price growth and weaker purchase activity at the upper end of the market,” Kan said.
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