There are some signs of a cool down in a few of the hottest corners of the U.S. housing market, Redfin said in a report on Friday, even as a San Diego realty group reported a new high in median prices.
Could high house prices and rising mortgage rates though be cutting into homebuyer demand?
Among the early tells, according to Redfin:
- Google searches for “homes for sale” dropped by double digits in San Francisco and Los Angeles in the second week of March from a year earlier.
- Tours of homes for sale in California were down 21% as of March 31, as compared to the first week of 2022, data from ShowingTime shows indicates.
- Redfin agents in San Francisco, L.A., Washington DC, Boston and Seattle reported a drop in requests for home buying help at the start of this year compared with last year, even as requests nationwide surged, and
- Agents in California say they are seeing fewer offers on each home.
Meanwhile, in San Diego in March, median sales prices for single-family homes rose 7% to $975,000 compared to last month.
Yet the Greater San Diego Association of Realtors, in a Friday release, also reported that year over year, sales of existing homes were down 6% for single-family homes and nearly 17% for condos and townhomes.
Nationwide, home prices have risen about 35% in the two years since the COVID-19 pandemic slammed the nation and the Federal Reserve slashed short-term interest rates to near zero, the Zillow Home Value Index shows.
The Fed last month began raising its policy rate to bring down decades-high inflation as the economy reopened. Longer-term borrowing costs have climbed swiftly in anticipation of more aggressive rate hikes ahead.
The average interest rate on a 30-year-fixed mortgage, the most popular U.S. home loan, rose last week to 4.9%, a fresh three-year high, data from the Mortgage Bankers Association showed this week.
The U.S. housing market is still hot, however, even in cooling California cities. The average home in L.A., for instance, is selling for 5% over its asking price, with a record share selling within a week of listing, Redfin said.
Nevertheless, the new signs, the report said, predict a price slowdown in coming months.
– Staff and wire reports