For the four-week period ending March 21, Redfin has found [1] that as the median home-sale price increased 16% year-over-year to an all-time high of $331,590, 39% of homes sold above their list price, also an all-time high and 15 percentage points higher than the same period a year earlier. Pending home sales were up 28% year-over-year, as well, with new listings of homes for sale down 12% from just one year ago.
"It's concerning how much home prices have risen during the pandemic," said Redfin Chief Economist Daryl Fairweather [2]. "When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans. That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society. The Biden Administration is putting together an infrastructure bill right now that includes building 1.5 million sustainable homes, but there is no guarantee the bill will be passed with every policy proposal intact. America needs an audacious goal to increase the housing supply, given the U.S. is short 2.5 million homes. It may be expensive to build millions of homes, but ignoring the problem would only cause housing to become more unaffordable and worsen housing insecurity."
Asking prices of newly-listed homes were flat from the previous four-week period at $349,973, but were up 11% from the same time a year ago. Active listings (the number of homes listed for sale at any point during the period) fell 42% from 2020 to a new all-time low as inventory tightened even further.
However, in the month of February, home sales prices in February rose more than they have during any month since July 2013. Redfin reported [3] that the national median home-sale price rose 14.4% year-over-year to $336,200 in February.
“This is the strongest seller’s market since at least 2006,” said Fairweather [3]. “Buyers outnumber sellers by such a huge margin that many homeowners are staying put because they know how hard it would be to find a place to move to. It seems like the only move-up buyers who are confident enough to list their homes are those who are relocating to a more affordable area where they’ll have an edge on the local competition.”
While the gap in affordability [4] is of great concern to prospective buyers, bidding wars are heating up [5] that are shutting many out of the market entirely.
"The uptick in mortgage rates is likely fueling more bidding wars in the short term because house hunters are rushing to buy homes before rates rise even further,” said Fairweather [5]. "If mortgage rates move significantly higher, we’ll likely see some buyers move to the sidelines, which will curb competition in the long run."
With the rise in bidding wars, homes are selling at a quick clip, as 58% of homes that went under contract had an accepted offer within the first two weeks on the market, another all-time high for the measure, and 46% higher than the same period a year ago. Forty-five percent of homes that went under contract had an accepted offer within one week of hitting the market, an all-time high and up from 33% during the same period a year earlier.
“The housing market is now like a Soviet-era supermarket, with most of the shelves empty,” said Redfin Chief Executive Officer Glenn Kelman [6] during a recent earnings call.