Rising rates create a stressful environment for buyers – Advice Eating

HouseCanary, Inc. has released its latest Market Pulse report — an ongoing review of Housing Canary’s proprietary data and insights — covering 22 listing-derived metrics and comparing data between April 2021 and April 2022.

The inventory of new homes remained negative in April, creating even more affordability issues for many potential buyers. After a long period of historically low interest rates, speculation about the Federal Reserve’s upcoming plans continues, but experts believe many participants in the housing market have already discounted the impact of short-term rate hikes.

Mortgage rates have risen sharply this year, including rates on 30-year fixed-rate mortgages, which have risen 200 basis points since January. Rising interest rates combined with inflated prices have created a difficult buying environment as home ownership costs rise, but could also discourage potential sellers from listing their properties in the current market.

“In April, net new home inventory remained negative, creating further affordability concerns for many potential buyers,” said Jeremy Sicklick, co-founder and CEO of HouseCanary. “Following a prolonged period of historically low interest rates, speculation continues regarding upcoming Federal Reserve plans, but we believe that many market participants in the housing market have already priced in the impact of short-term rate hikes. First, we’ve seen mortgage rates rise sharply this year , including the interest rate on 30-year fixed-rate mortgages , which is up 200 basis points since January Rising interest rates combined with already inflated prices have made for a difficult buying environment as they raise the cost of home ownership, but could also discourage potential sellers from selling their properties to list on the current market.”

Total net new registrations:

  • Since April 2021, 3,187,324 net new listings have been placed on the market, down 1.5% from the 52 weeks prior
  • Percentage of total net new registrations in the last 52 weeks by house price:
  • $0-$200,000: 16.0%
  • $200,000-$400,000: 39.1%
  • $400,000-$600,000: 22.8%
  • $600,000 to $1M: 14.9%
  • >$1mm: 7.2%
  • Percent change in net new registration activity over the last 52 weeks compared to the same period in 2021, broken down by house prices:
  • $0-$200,000: (-21.7%)
  • $200,000-$400,000: (-10.8%)
  • $400,000-$600,000: +18.0%
  • $600,000 to $1M: +26.0%
  • >$1mm: +17.6%

Monthly net new supply volume (single-family homes):

  • Monthly new listing volume decreased by 7.6% compared to April 2021
  • In April, 326,455 net new registrations were placed on the market, which corresponds to a decrease of 12.0% compared to the previous year
  • For the month of April, the percentage change in net new listing volume compared to April 2021, broken down by home price:
  • $0-$200,000: (-25.3%)
  • $200,000-$400,000: (-22.8%)
  • $400,000-$600,000: (-1.1%)
  • $600,000 to $1M: +7.7%
  • >$1mm: +3.1%

Offers under contract:

  • In the last 52 weeks, 3,386,036 properties have been signed, representing a 6.4% decline relative to the 52 weeks before
  • Share of total contract volume since April 2021, broken down by home price:
  • $0-$200,000: 16.6%
  • $200,000-$400,000: 39.5%
  • $400,000-$600,000: 22.3%
  • $600,000 to $1M: 14.5%
  • >$1mm: 7.1%
  • Percentage change in contract volume over the last 52 weeks compared to the same period in 2021, broken down by house prices:
  • $0-$200,000: (-24.2%)
  • $200,000-$400,000: (-14.8%)
  • $400,000-$600,000: +10.8%
  • $600,000 to $1M: +19.1%
  • >$1mm: +14.0%

Monthly contract volume (single-family house):

  • For the month of April, 348,594 deals were signed nationwide, down 6.6% from a year earlier.
  • For the month of April, the percentage change in contract volume compared to April 2021, broken down by house price:
  • $0-$200,000: (-14.8%)
  • $200,000-$400,000: (-15.4%)
  • $400,000-$600,000: +5.0%
  • $600,000 to $1M: +8.5%
  • >$1mm: (-0.7%)

Activity of the median asking price (single-family homes):

  • For the week ended April 29, 2022, the median price of all single-family home listings in the United States was $427,975, an 11.8% increase from the prior year.
  • For the week ended April 29, 2022, the average closing price for single family homes in the United States was $428,223, a 15.8% increase over the prior year.
  • The median price of all single family homes in the US is up 1.3% mom and the median closed home price is up 4.7% mom.

“In turn, we expect limited new offerings to continue to enter the market over the next few months, which will result in continued upward pressure on prices,” Sicklick said. “But looking towards the end of 2022, we see scope for the market to settle down once and for all.”

Overall, nationwide supply constraints continue to dominate current market dynamics as new inventories remained negative in April 2022. Approximately 326,455 net new registrations were placed on the market, down 12% from April 2021. The decline in net new listings was driven by a 7.6% decrease in new listing volume and a 33.5% increase in deletions compared to April 2021. Additionally, 348,594 listings were signed, resulting in a 6.6% decrease from April 2021. Experts anticipate that limited new offerings will continue to enter the market over the next few months, leading to potentially sustained upward pressure on prices.

To read the full report including graphs and methodology, click here.

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