The average 30-year fixed rate mortgage exceeded 5% in April, the highest level since 2011, according to Freddie Mac. The recent surge in mortgage rates has reduced the pool of eligible buyers and has caused mortgage applications to decline. On May 1st, Palm Springs Area Real Estate inventory was 859 units, which is 149 units more than last year, 181 units more than last month. Total sales in April averaged 981 units a month over the last three-month, which is 23% less than the 1,276 units last April.
Inventory remains low, with only 0.9 months supply at present, Palm Springs Area Home prices continue to surge. At the end of April, the median price of a detached home in the Coachella Valley was $670,500, up 19.8% year over year. Over two years it’s up an astonishing 52%. The median price for attached homes in April was $479,450, which is up 37% year over year and up 60.3% over two years. Three cities have year-over-year gains for their detached homes above 40% – Rancho Mirage, Indian Wells and Palm Springs. In the attached market, seven cities have gains over 40% – Rancho Mirage, Bermuda Dunes, Desert Hot Springs, Palm Desert, Cathedral City, Indio and Palm Springs.
Affordability challenges are limiting buying activity, and early signs suggest competition for homes may be cooling somewhat. Nationally, existing home sales are down 2.7% as of last measure, while pending sales dropped 1.2%, marking 5 straight months of under contract declines, according to the National Association of REALTORS®.
April data suggests a positive turn of events is on the horizon for weary buyers! If the trends we’re seeing now hold true, we could potentially see year-over-year inventory growth within the next few weeks. The key to this growth will be the continuation of softening buyer competition and an increasing number of sellers putting homes on the market.
There’s a long uphill climb to balance, but it starts with heading in the right direction, and April data shows a lot of promise.