The current real estate market in the United States is full of variables; although the housing supply continues to increase, demand has dropped to its lowest level since the pandemic in 2020, with fewer people willing to buy houses. This directly leads to longer listing times for homes for sale in the market.
According to the latest report from the real estate brokerage company Redfin, the current housing market situation can be described as “sellers entering the market, buyers staying on the sidelines”; housing supply has reached its highest level since 2020, but market demand is rapidly declining.
In the just-passed January, the overall sales volume of homes for sale in the United States dropped to the lowest level since the outbreak of the pandemic, with a decrease of 4.2% compared to the previous period. Even in California, where the real estate market has traditionally been hot, home sales are not as robust as before.
Redfin believes that there are many reasons for this situation, with one of the main factors being the continued rising housing costs that exacerbate the monthly loan burden for buyers.
On average, homes for sale in January were on the market for 56 days, which is 7 days longer than the previous month and 6 days longer than the same period last year.
Many real estate agents in the Los Angeles area have stated that it doesn’t seem like a good time for sellers. The situation where buyers were aggressively bidding for properties during the pandemic is no longer the case, with many sellers starting to lower prices to attract buyers, leading to longer transaction times than before.
It is a mixed bag for buyers as well, as while there are more housing options available now and more room for negotiation in terms of prices, mortgage rates have also increased.
Redfin found that buyer reluctance is partly due to mortgage rates hitting an 8-month high. In January, the average 30-year fixed-rate mortgage in the U.S. was 6.96%, while the 15-year fixed-rate mortgage averaged 6.11%.
The persistently high house prices are also a major factor. The median house price in the United States in January was around $420,000, a 45% increase from January before the pandemic. In California, the prices are even more daunting, with the median house price in December exceeding $860,000, representing a 50% increase compared to before the pandemic.
Additionally, economic uncertainty is also dampening buyer motivation. Agents have indicated that for many Americans, there are many pending issues currently.
“Economic factors have always been the primary concern for people,” said Charles Wheeler, a real estate agent in San Diego for Redfin. “Sellers need to be aware that since buyers have more negotiation power, if they want to sell quickly, they need to ensure their property is both attractive and priced well.”
The U.S. housing market continues to face constraints of limited inventory and high demand. While the number of homes for sale is increasing, it is only slightly alleviating the market balance.
Redfin data shows that the cities with the largest increase in new listings are Seattle, Oakland in California, and the capital Sacramento. The cities with the largest increase in active listings are Oakland, Seattle, and Cincinnati.