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Housing Prices: Have They Reached Their Peak?

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Nearly 50% of homes sold for more than their list price during the four weeks ending May 16, but there are signs that housing market demand may be reaching its peak, according to a recent study from Redfin.

Pending sales for the seven-day period ending May 16 were down 10% from four weeks prior, compared to an 8% increase during the same period in 2019. Mortgage purchase applications also decreased 4% week over week.

New listings of homes for sale were down 12% from the same period in 2019, and active listings — the number of homes listed for sale at any point during the period — fell 49% from the same period in 2019. (2019 is being used as a reference point since 2020 data is skewed by the pandemic.)

This is happening, of course, with prices remaining astronomically high. Home prices were recently reported at a record high of $352,975, and were up 24% year over year. Asking prices increased to $358,975, also a record high. Homes in May are also on the market for an average of only 17 days.

Mortgage rates also spiked in the last week, jumping six basis points to 3% — a possible detriment to would-be homebuyers who were eyeballing the sub-3% rates the country saw earlier this year and during the peak months of the COVID-19 pandemic.

Regional numbers also reflect the enormous difference in housing market demand from April 2020.

The number of homes sold in April was up 34% from a year earlier, but only 8% from the same time in 2019. The only metro area that saw home sales decline was Rochester, New York (-3%). The largest gains in sales were in places that had the most abrupt slowdown of home sales in April 2020, including San Francisco (up 184%), San Jose (up 150%), and Miami (up 120%).

Median home prices increased from a year earlier in all of the 85 largest metro areas Redfin tracks. The smallest increase was in Honolulu, Hawaii, where prices went up 0.2% from a year ago. The largest home price increases were in Austin (up 42%), Oxnard, California (up 26%) and Miami (up 26%).