Redfin’s report on housing reveals that for the week ending on July 5, home sales rose once more. Specifically, home sales rose by 2% when compared to pre-pandemic home sales.
This recovery in the housing market marks the very first time that home sales have surpassed pre-pandemic levels since January and February. According to Redfin, this increased housing demand is due to the low mortgage rates currently available.
Freddie Mac’s Primary Mortgage Market Survey revealed that mortgage rates fell below 3% for the first time in 50 years, with the rate for a 30-year fixed-rate mortgage falling to 2.98%.
These more affordable mortgage rates have brought about greater access to homeownership, thus increasing pending home sales and homebuyer demand. Rob Foos, a Boston-based Redfin mortgage advisor, had weighed in on the current state of housing.
“The industry is responding to an avalanche of applications for refinances and purchases. A combination of rock-bottom rates plus pent-up purchase demand has resulted in the highest levels of purchase applications in about a decade,” he said.
Experts only expect these upticks to continue in an upward trajectory moving forward. In fact, pointing to the fact that pending sales grew 10% from pre-pandemic levels (seasonally adjusted). Redfin tentatively asserts that the market is on its way to recovery.
But with the increased buyer demand and still limited of supply, bidding wars have really heated up, with real estate agents reporting that it has been difficult to keep pace with client demand. Specifically, statistics reveal that the number of U.S. homes available on the market currently is down more than a quarter (28%) from this same time last year.
Redfin agents also revealed that this lack of homes for sale on the market has also ushered in a wave of fear from sellers who worry over being able to find a new home of their own once their property closes. Redfin agent Thomas Wiederstein shared his firsthand experience with this phenomenon.
“Some of my clients are considering selling, but it’s a matter of finding a home they can buy. Even if they do find a home that checks all the boxes, many move-up buyers can’t buy a new home before they sell their current one. With bidding wars so common, it’s very hard to get an offer accepted that’s contingent on the sale of the buyer’s current home,” he said.
With no signs of the market slowing down, Redfin is still cautious when it points to how the market may be tested at the end of the month, with the CARES Act’s benefits set to expire on July 31.