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Home Sales Are Cooling — But The Competition Is Red Hot. What Gives?

New listings plunged 21.8 percent from a year ago, marking one of the most significant annual drops since the beginning of the pandemic, according to a new analysis of housing inventory by Redfin.

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Record-low inventory has resulted in intense competition among homebuyers even in markets where home sales are floundering, according to new data released Thursday by Redfin,

New listings plunged 21.8 percent from the same time last year during the four-week period ending April 2, one of the most significant annual drops since the beginning of the pandemic. The drop has resulted in an unseasonal decline in inventory at the start of spring, typically the busiest time of the year for home buying, according to the report.

The few homes that are listed are getting snatched up fast, according to Redfin. And among the homes that go under contract, nearly half are doing so within two weeks.

That’s up from just a quarter at the beginning of the year. Today’s supply of homes for sale would take 2.8 months to sell at the current homebuyer consumption rate — a sharp drop from a three-year low of 4.5 months recorded at the beginning of January, and up from a near record-low of 1.9 months recorded a year ago.

Pending home sales remain 19 percent lower than they were a year ago, partly due to so few new homes hitting the market, with would-be homesellers sitting on the bench while mortgage rates hover above 6 percent.

“Elevated mortgage rates are perhaps an even bigger deterrent for would-be sellers than for would-be buyers,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “Giving up a 3 percent mortgage rate for one in the 6 percent range is a tough pill to swallow. The lack of homes hitting the market explains why the market is moving fast even though sales are still down. The lack of new listings is also one reason why sales are down: Buyers can’t buy if sellers don’t want to sell.”

While new listings are down in every major metropolitan area, the trend is more extreme in some areas. In Denver, new listings are declining at approximately the same rate as the national pace, creating an environment where sellers have the upper hand as long as their home is priced well.

“Shiny new listings are getting multiple offers and selling fast. The caveat is that they have to be priced correctly from the beginning,” Redfin agent Stephanie Collins said in the report. “Sellers are hesitant, partly because it’s not spring 2022 anymore. I’m reminding potential sellers that buyers are out there, and some homes have bidding wars — they just need to price a bit lower than they would have a year ago.”

Conversely, in Austin, inventory is piling up. The city has a 4.4 month supply of homes — more than almost anywhere in the country — and prices are down 15 percent year over year.

“Buyers have more power right now,” Austin Redfin agent Andrew Vallejo said in a statement. “The silver lining of high rates and the slow market we’ve been experiencing here is that some locals are able to buy in neighborhoods they couldn’t have gotten into last year and get contingent offers with small down payments accepted. But attractive homes that are priced competitively are selling quickly. Sellers are starting to notice, and they’re prepping and pricing their homes accordingly. I think we’ll start to see more listings over the next several months.”

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