Redfin’s recent study indicates that the “lock-in” effect, which caused a significant decrease in available property listings, has revived the trend of bidding wars during the pandemic. This is because prospective homebuyers are vying for a limited number of homes, as they choose to remain in their current homes to avoid obtaining mortgages at higher interest rates.
The challenges mentioned could potentially be eased if the Federal Reserve opts to discontinue any upcoming interest rate hikes during their June gathering.
In April, 48% of homes that were sold went under contract within a span of two weeks. This represents a decline from 51% during the same period last year, but an increase from 46% from the previous month. This rise is significant because the proportion of homes selling within two weeks usually drops in April after reaching its peak in March.
Redfin’s real estate agents have observed a situation where buyers are contending for a limited supply of homes, particularly in sought-after areas. In April, new property listings decreased by 23% compared to the same month last year, marking the second-largest drop since the pandemic’s onset. This decline surpassed the 17% year-over-year reduction in pending sales, which measures the number of active buyers in the market.
The housing inventory decreased in April, which is contrary to the usual trend of an increase during the summer season. Yet, there was an increase in new home listings and pending sales from the previous month in April, which is a common occurrence during the springtime.
According to Steve Centrella, a Redfin Premier real estate agent based in Washington, D.C., many homeowners have recently shown interest in selling their properties. This is different from a typical year when this interest would have been evident a month or two earlier. Some sellers are stepping forward due to the presence of buyers in the market, despite the high-interest rates. Several of these sellers are not purchasing another property, such as those listing their second home or rental property. They are not as reluctant to let go of a low mortgage rate since they are not acquiring a higher one immediately.