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After a winter slump, the real estate market is starting to look a little brighter in time for spring. More homes are entering the market, and buyers are starting to consider buying again after staying on the sidelines, according to the latest numbers from Redfin.
For the four weeks ending March 3, new listings were up 13%, the biggest increase in three years. That uptick helped bring the total number of homes for sale up 1.7%, marking the first time in eight months that supply has increased. Meanwhile, asking prices had their smallest increase in two months, with around 5.5% of home sellers dropping their asking price.
With spring on the way, there’s also been a jump in interest in housing, with touring activity up 23% from the start of the year. Mortgage purchase applications were also up 11% for the week ending March 3.
Still, these numbers haven’t yet boosted housing sales, with pending sales down 6% year over year. Some of that may be due to the continued rise in mortgage rates, which pushed the median monthly housing payment to $2,694, according to Redfin.
Metro Areas With the Biggest Growth and Listings
Of course, not all metro areas are seeing the same number of new listings. In Texas and Florida, for example, there has been a large year-over-year increase, with Forth Worth, Texas, seeing the largest uptick in listings at 27% and Fort Lauderdale, Florida, not far behind at 25.4%. With many more homebuyers moving to Florida in recent months, this could be welcoming news for buyers.
Still, the uptick in new listings hasn’t yet translated to a large increase in pending sales, as mortgage rates still remain elevated. But pending sales did increase in eight metro areas, including Austin, Texas.
Homebuyers are still under pressure from rising interest rates. The median monthly mortgage payment was up 6.9% compared to a year ago. While mortgage rates have dipped slightly since the fall, they still remain elevated, with the current average for a 30-year fixed rate mortgage at 6.88% as of March 7.
Even with a slight increase in supply, it’s still a seller’s market, with the median sale price up 5.3% year over year, according to Redfin. And even while some sellers have dropped their listing price, many sell for the final list price or even more—24% of homes in February sold for above the final list price.
What the Numbers Tell Us About Current Real Estate Trends
Although the increase in new listings is welcome news for the supply crunch in the housing market right now, the U.S. still has a serious housing shortage. Despite a surge in new construction, a Realtor.com analysis found that the market is missing around 7.2 million homes as a result of underbuilding.
That shortage of supply isn’t helping prices come down. Still, while housing prices remain high, some real estate experts say the market is looking promising for buyers.
Chen Zhao, a Redfin economic researcher, said in a press release that prices are likely to come down as mortgage rates decline, adding: “Buyers who can afford today’s mortgage rates may have better luck finding a home now than they have in the past several months, and they also may be less likely to face competition because inventory is improving.”
The Bottom Line
With the increase in new listings, investors looking to buy this spring are likely to have more choices than they did a year ago. Still, there are other uncertainties in the real estate market, and buyers seem to be still waiting to find out if prices (and mortgage rates) will continue to decline.
While there may be opportunities in some metro areas, sellers still have the upper hand. But it remains to be seen if we’ll see a spring surge in sales.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
