Rising mortgage rates, home prices a sign of affordability issues

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The high number of home sales both above and below the list price in May, combined with rising mortgage rates and prices, was a sign buyers are near affordability limits, Redfin said.

During May 27.6% sold above their list price, the highest percentage Redfin has recorded, indicating there was strong competition for the few homes available. On the other hand, nearly a quarter of homes for sale had a price drop during the month. This was the highest percentage of price drops since September 2017.

"Prices are still increasing, but not at the same rate we saw earlier in the spring," said Redfin's Senior Economist Taylor Marr in a press release. "The record percentage of homes sold above list price is at odds with the higher percentage of price drops in May. This tells us that while it's still very much a seller's market, price growth and rising mortgage rates may be pushing buyers to the limit of what they're able to pay."

There were 728,000 homes available for sale in May; compared with April that was a gain of 5.6%. Home sales increased to 292,000, up 18.4% from April and 3.6% from one year ago.

But there is just 2.5 months of supply on the market, a decline of 0.3% from April and 0.2% from May 2017 and far below the six-month mark that is considered to be a balanced market between buying and selling.

The median sales price of $305,600 for the 174 markets Redfin tracks increased 1.5% from the previous month and 6.3% from May 2017.

The time from listing to contract signing continued to condense as median days on the market fell to a record low 34 from the previous record set in April of 36. A year ago, a new listing was on the market for a median of 37 days.

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