More of the same was delivered in the U.S. housing market last month, with March 2022 being the hottest market on record. That’s according to Seattle-based Redfin Corp. (NASDAQ: RDFN), which found homes sold at their fastest pace, and for more above list price, than any other March on record. Nationally, the median home-sale price rose 6.2% in March, to an all-time high of $412,700.
Another month, another record-breaker. But there were some early signs of a potential letting up in the housing market later in March, and so far in April, although buyers — especially in hot Sun Belt markets — likely won’t feel many ripple effects for months to come.
Daryl Fairweather, chief economist at Redfin, said a slowdown has so far primarily been observed in U.S. coastal markets. But if a buyer is outpriced in a market like Los Angeles, they may instead try their luck in a more affordable market like Phoenix or Las Vegas, she added.
That’s bolstering a pandemic-increased migration out of higher-cost cities to more affordable Southeastern and Southwestern states, which have generally seen the largest gains in home-price appreciation since March 2020.
Nationally, typical home values grew 20.6% from March 2021 to March 2022, according to Zillow Group Inc. (NASDAQ: ZG) data. Among markets tracked by Redfin, the largest annual price increases were in Tampa, Florida, at 29%; Phoenix, at 27%; and McAllen, Texas, also at 27%. Both pending and actual home sales fell in March, at an annual rate of 6.1% and 8.1%, respectively. Those metrics dropped 3.6% and 3.7% from a month prior.
The spring months, the traditional kickoff to prime homebuying months, usually see an uptick in inventory. That’s not been the case so far in 2022.
Seasonally adjusted listing activity dipped in March, at a decrease of 1.1% from February and 6.2% from March 2021, Redfin found.
It’s possible some sellers aren’t motivated to list their homes if they refinanced their mortgages during the recent historic lows, Fairweather said. With mortgage rates spiking in recent weeks and months, that’s still expected to have a chilling effect on the overall housing market, but major metrics like the rate of home-price appreciation won’t be observed for months yet, as inventory remains constrained and buyer demand high.
What might start to burn off are the ultra-intense bidding wars that’ve been hallmarks of the pandemic housing market, or scenarios like waiving contingencies on a deal, she added. Higher mortgage rates are eroding how much a household can afford to pay for a home.
Twelve percent of homes listed on the market had a price drop during the four-week period ending April 3, up from 9% a year earlier and the highest share since early December, Redfin found more recently.
This article by Ashley Fahey – Editor, The National Observer: Real Estate Edition, 04.18.22