Then again, maybe Kelman was not wrong, just early.

In a blog published this week, Redfin analyst Tim Ellis shares more evidence that the housing market has indeed topped, and that early indicators of homebuyer activity have faltered further as mortgage rates shoot up above 5%, pushing demand lower – a predictable outcome which we previewed a month ago in “Housing Affordability Is About To Crash The Most On Record” – and which means that sellers have no choice but to follow with more price cuts.

Below we excerpt from Redfin’s latest observations on the slowing housing market.

Housing Market Update: Demand Slips, Pushing More Sellers to Drop Asking Prices

Early-stage homebuying demand continues to falter this spring as new listings fell 7% from a year earlier, the average 30-year fixed mortgage rate shot up to 5% and the median asking price climbed to $397,747, sending the typical homebuyer’s monthly payment up 35% year over year to an all-time high of $2,288. Here are the key early indicators that tell us demand is softening at a time of year it typically springs up:

• Fewer people searched for “homes for sale” on Google—searches during the week ending April 9 were down 3% from a year earlier.
• The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—has declined 3% in the past four weeks, compared to a 5% increase during the same period last year. The index was up 2% from a year earlier.
• Touring activity from the first week of January through April 10 was 23 percentage points behind the same period in 2021, according to home tour technology company ShowingTime.
• Mortgage purchase applications were down 6% from a year earlier, while the seasonally-adjusted index increased 1% week over week during the week ending April 8.
• For the week ending April 14, 30-year mortgage rates rose to 5%—the highest level since February 2011. This was up from 4.72% the prior week, and the fastest three-month rise since May 1994.

We’re also closely watching the accelerating share of home listings with price drops, which is climbing at its fastest spring pace since at least 2015, another sign that demand is not meeting sellers’ expectations.

“There really is a limit to homebuyer demand, even though the market over the past few years has made it seem endless,” said Redfin Chief Economist Daryl Fairweather. “The sharp increase in mortgage rates is pushing more homebuyers out of the market, but it also appears to be discouraging some homeowners from selling. With demand and supply both slipping, the market isn’t likely to flip from a seller’s market to a buyer’s market anytime soon.”

Despite these early signs that the market is slowing, it still feels as hot as ever for homebuyers, with new records set for home-selling speeds and price escalations, based on data going back to 2015. Forty-five percent of homes that went under contract found a buyer within one week, and the average home that sold went for 2.4% above its asking price.

“If a home is on the market for more than a week, people start to wonder why or assume something is wrong with it,” said Redfin Boston real estate agent James Gulden. “Every offer I’ve written recently has faced multiple offers, but some people have finally had enough of all the competition and are pulling out. They’re becoming less willing to make a risky offer in a high-stress bidding war situation.”

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, the data in this report covers the four-week period ending April 10. Redfin’s housing market data goes back through 2012.

Data based on homes listed and/or sold during the period:

• The median home sale price was up 17% year over year to a record high of $389,178.

• The median asking price of newly listed homes increased 14% year over year to $397,747.

• The monthly mortgage payment on the median asking price home rose to a record high of $2,288 at the current 5% mortgage rate. This was up 35% from a year earlier, when mortgage rates were 3.04%.

• Pending home sales were up 1% year over year, and have rolled over.

• New listings of homes for sale were down 7% from a year earlier, the 21st-straight annual decline.

• 58% of homes that went under contract had an accepted offer within the first two weeks on the market, an all-time high. This was up from the 55% rate of a year earlier.

• Homes that sold were on the market for a median of 18 days, down from 26 days a year earlier.

• On average, 3.2% of homes for sale each week had a price drop, with 13% dropping their price in the past four weeks. That’s up from 10% a month earlier and 9% a year ago.

• The share of listings with price drops is climbing faster during this time of year than they have since at least 2015. Typically during this time of year the share of homes with price drops is slightly down month over month. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to an all-time high of 102.4%. In other words, the average home sold for 2.4% above its asking price. This was up from 100.4% in 2021.