Houses are going from listing to contract faster, at a time in the selling cycle when they are usually slowing down. According to Redfin’s newest Housing Market Update, one-third of homes that sold in the past four weeks went under contract within seven days of hitting the market.
The time it takes for a home to go under contract has been dropping for the past six weeks, despite the fact that the market usually begins to slow in the fall.
Thirty-three percent of homes sold had an accepted offer within one week of listing, a 30% increase year-over-year (YOY) and up 20% from 2019. Forty-five percent of homes sold had an accepted offer within two weeks, up 3% from the year prior and 14% from 2019.
Redfin cites steady homebuyer demand as the reason for rising sale speeds. Redfin’s Homebuyer Demand Index rose 1.2 points in the week ending October 24 alone.
Industry experts have noted minor decreases in home prices and other factors that would point to a cool-down, but the market remains hot. Home stock shortages have continued to drive prices up as potential buyers scramble to buy the few homes still available.
“Homes continue to sell quicker and quicker,” said Redfin Chief Economist Daryl Fairweather. “There are still plenty of homebuyers lying in wait who missed out during the Spring frenzy, and they are snatching up homes quickly. Now, those homes are selling for near-record prices. The housing market will likely stay hot until mortgage rates rise substantially.”
Mortgage rates have begun to tick up, rising to 3.09% last week. The Federal Reserve has indicated it will start tapering its bond-buying by the end of the year, with interest rate increases possibly coming sooner than expected. But some expect mortgage rates won’t change drastically as a result.
“The pending taper and change to the monetary policy outlook will likely contribute to a modest increase in mortgage rates over the medium term,” MBA chief economist Mike Fratantoni said of the Fed’s tapering plan.
In the four-week period ending October 24, the median home-sale price rose 13% YOY, up 30% from the same time in 2019.
For newly listed homes, asking prices increased 11% YOY and 26% from 2019. This is a 1% drop from the record high reported in the period ending October 3. The report notes that asking prices usually rise in September before slipping in October and through the rest of the year.
Pending home sales increase 2% YOY and were up 47% compared to 2019. New listings dropped 8% YOY, though they increased 6% compared to 2019. However, active listings were down 22% YOY and 40% from 2019.