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Transcript:

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Kathy Fettke [Speaker]: It looks like the sellers are coming out of hiding. Redfin is reporting an increase in listings, and a new survey by Fannie Mae shows that more and more people feel that \\u201cnow\\u201d is a good time to sell. (1) But there are also signs of a pullback among homebuyers.

Hi I\\u2019m Kathy Fettke and this is Real Estate News for Investors.

It\\u2019s been a sellers\\u2019 market throughout the pandemic, as buyers compete for a dwindling supply of existing homes. But now that the pandemic is easing and home prices have hit record highs, sellers are more motivated to put their homes up for sale.

New Listings Jumped in June

Redfin says new listings jumped 4% in June, compared to June of last year. That\\u2019s the biggest increase since 2019, before the pandemic. But the total number of active listings is still well below levels they were at a year ago. CNBC reports they are off by 32%. But that\\u2019s also the smallest year-over-year drop since February. (2)

A monthly Fannie Mae survey shows strong seller optimism. 77% of the participants said \\u201cnow\\u201d is a great time to sell. Home prices have reached record highs, and sellers want to capture some of that appreciation. According to CoreLogic, prices were up 15.4% year-over-year in May. They are expected to continue rising, but not as fast. CoreLogic is predicting another 3.4% gain by May of next year.

Many homes also sell well above their listing prices as buyers make high offers and compete with other buyers. In June, 55% sold above the listing price compared to 27% in June of last year. But it\\u2019s that kind of price growth that is also pushing some buyers out of the market. The same Fannie Mae survey shows that 64% think it\\u2019s a bad time to buy.

CoreLogic CEO, Frank Martell says: \\u201cFirst-time buyers are hitting a wall in many places around the country as the pace of home-price rises outpace the benefits of lower borrowing costs. Younger and first-time buyers, including younger millennials, are faced with the challenge of having sufficient savings for a down payment, closing costs and cash reserves.\\u201d

While sellers are revving their engines, some buyers are downshifting. The pullback is showing up in the pending sales report. Redfin says: \\u201cPending sales posted their smallest year-over-year increase in almost a year, and fell twice as fast month-over-month as they did during this same time in 2009.\\u201d

The Redfin Homebuyer Demand Index is based on requests for home tours and other agent services. It recently fell 1.2% week-over-week. There was also a similar drop in mortgage applications.

Redfin\\u2019s Chief Economist Daryl Fairweather says: \\u201cMany buyers have backed away from the housing market and are waiting until more and better homes are listed.\\u201d He says: \\u201cThey don\\u2019t have the same sense of urgency that they did at the beginning of the year.\\u201d

Sellers Have the Upper Hand

But even with a pullback in demand, the experts say it\\u2019s still a seller\\u2019s market. According to Fannie Mae\\u2019s chief economist, Doug Duncan, sellers will continue to have the upper hand. He says: \\u201cDespite the pessimism in home buying conditions, we expect demand for housing to persist at an elevated level through the rest of the year.\\u201d

He attributes that to mortgage rates that are still hovering below 3%, along with consumer confidence about the job market and household income.

You\\u2019ll find links in the show notes at newsforinvestors.com. Click here to join RealWealth now, it\'s free and only takes a minute!

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Thanks for listening. I\\u2019m Kathy Fettke.

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Links:

1. https://www.redfin.com/news/housing-market-update-new-listings-pass-2019/

2. https://www.cnbc.com/2021/07/12/homebuyers-finally-get-a-break-as-new-listings-rise-and-mortgage-rates-drop.html?&qsearchterm=catching%20a%20break