The once red-hot housing market appears to be cooling as Redfin reported a 25% decline in homes sold in September compared to September 2021.
Redfin’s monthly report, which was released on Wednesday, indicated a 22% drop in new listings in September compared to the prior year. These drops were the largest seen since April and May 2020, Redfin said.
Although housing prices dropped by .5% from August to September, they went up 8% from September 2021 to September 2022.
A series of interest hike rates is driving the drop in sales, experts say.
“The U.S. housing market is at another standstill, but the driving forces are completely different from those that triggered the standstill at the start of the pandemic,” said Redfin economics research lead Chen Zhao. “This time, demand is slumping due to surging mortgage rates, but prices are being propped up by inflation and a drop in the number of people putting their homes up for sale.”
The amount of time a home spends on the market is going up, too. The median number of days a home was on the market in September was 32, up from 27 in August and 19 in September 2021.
The housing market is expected to decline continually amid elevated interest rates.
“The housing market is going to get worse before it gets better. With inflation still rampant, the Federal Reserve will likely continue hiking interest rates. That means we may not see high mortgage rates—the primary killer of housing demand—decline until early to mid-2023,” said Zhao.