Decline in home inventories impacted lower home sales, says Redfin

Decline in home inventories impacted lower home sales, says Redfin

Fewer homes were offered for sale in December, sending seasonally-adjusted home sales down 3.6%, according to a new report from Redfin. This marks the largest drop in sales on a monthly basis since May 2020. Home prices are up 15% from the previous year, the 17th consecutive month of double-digit increases.

“Home sales are declining, but not because of a lack of demand,” notes Daryl Fairweather, chief economist at Redfin. “There are a lot of homebuyers on the hunt, but nothing to sell. In many markets, shopping for a home feels like going to the grocery store only to find the shelves bare. In January, I expect to see more buyers and sellers In the market, but demand will increase more than supply – driving prices higher at the beginning of this year.”

“The runaway housing market hasn’t taken a break for the holidays,” said Briona Chang, a Redfin real estate agent in the San Francisco area. “There was a two-bedroom house in Orinda that was listed just before Christmas, and about 40 people showed up immediately to the open houses. It ended up getting multiple offers and it went for $325,000 above the asking price of $1.2 million.”

Median selling prices are up from the previous year in all 88 metro areas except for one of the largest metro areas that Redfin tracks. The only metro area to see a decline was Bridgeport, Connecticut, where home prices were down 0.4% from a year earlier after a 28% year-over-year increase in December 2020. The biggest price increases were in Austin, Texas (+30%); North Port, Florida (+28%); and Phoenix, Arizona (+28%).

Seasonally-adjusted home sales in December fell 3.6% from the previous month and 11% from a year earlier, the largest annual decline since June 2020. Home sales were down from the previous year in 79 of the 88 largest Redfin metro areas. The largest decrease in sales was observed in Nassau County, New York (-22%); New Brunswick, NJ (-22%); and Albany, New York (-21%). The largest gains were in Greenville, South Carolina (+9%); Greensboro, North Carolina (+8%); and Baton Rouge Los Angeles (+7%).

Only one of the 88 largest metro stations tracked by Redfin recorded a year-on-year increase in the number of seasonally-adjusted active listings for homes for sale: Detroit, Michigan (+4%). The largest annual decrease in the supply of active housing in December was in Baton Rouge, Los Angeles (-52%); San Jose, California (-49%); and San Francisco, California (-46%).

Seasonally-adjusted new listings for homes for sale fell 13% in December from the previous year, the largest drop since May 2020. New listings are down from a year ago in 82 of the 88 largest metro areas.

The typical home sold in December under contract is in 24 days — a week faster than the previous year, when homes sold on an average of 31 days, but up nine days from a record 15-day low in June.

In December, 43% of homes sold were above list price, down 14 percentage points from a record high in June, but up 9 percentage points from the previous year. The average sell-to-list ratio in December was 100.5%, down from a record high of 102.6% in June, but up from 99.4% a year earlier.

Read the full report here.

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