While housing inventory remained at a record low in April, total supply fell at its slowest pace since March 2020 thanks to rising mortgage rates keeping new buyers on the sidelines. Year-over-year for-sale inventory dropped 9% in April, the first single-digit decline since the start of the pandemic, Redfin reports.
As mortgage rates continue to rise, home prices will escalate to new highs in nearly every regional market, causing a significant drop in buyer demand after years of record homebuying activity. Home sales dropped 8% year-over-year in April as the median home-sale price rose 16% to $424,000.
“When market conditions are changing it becomes more difficult for homebuyers and sellers to see eye-to-eye on pricing,” said Redfin deputy chief economist Taylor Marr. “Many sellers are still seeking sky-high prices for their homes even though rising mortgage rates have limited homebuyer budgets. As a result, buyers are backing off, which is causing home sales to fall and the housing shortage to ease. As demand continues to soften, more sellers will likely be forced to drop their prices in order to get offers. The good news is that this should finally bring more balance to the market.”