Inventory saw a record uptick in the four weeks ending December 4th as buyer demand dwindled and homes lingered on the market, according to new data from Redfin.
The total number of homes for sale rose 15% YOY in that period, the largest increase recorded in Redfin’s Homebuyer Demand Index.
New listings fell by 20%, however, suggesting the stock shortage will be ongoing.
Demand has dwindled as many homebuyers were priced out of the market by sky-high prices and rates. Buyers who could afford a home when interest rates were at historical lows found that in 2022, they couldn’t afford anything.
But homebuyer demand did rebound from an all-time low, up 5% from a week prior as rates continue to sink.
Rates averaged 6.33% this week, down three-quarters of a point in just four weeks. This is the largest decline since 2008.
“This week has been relatively calm and quiet as we approach the end of one of the most volatile years in housing history,” said Redfin Deputy Chief Economist Taylor Marr.
“But it’s not over yet. Next Tuesday’s inflation report is the 500-pound gorilla in the room, and the Fed’s press conference the next day will bring us much more clarity on how soon and how quickly we can expect mortgage rates to come down in the new year.”
Matthew Speakman, Zillow Home Loans senior economist, noted that declining rates are tied to Federal Reserve Chairman Jerome Powell’s hint that the Fed may slow the pace of hikes this month.
“The inflation dynamic remains investors’ chief focus; mortgage rates barely budged in response to the monthly jobs report, a release that usually tends to move markets,” he wrote.
Marr added that price declines are expected to be minor next year, making rates the major factor in affordability.
“If rates continue declining, more buyers may wade back into the market, as they’ll have lower monthly payments,” she said.