Homebuyer demand and low inventory drove home sale prices to near-record highs last month, while the average home sold above list price for the first time in nearly a year, fueling bidding wars in some markets.

June’s median home sale price was $426,056, coming in just 1.5% below May 2022’s all-time high of $432,397, according to a new Redfin report. 

Despite rising mortgage rates, the average home sold for more than its list price for the first time in nearly a year as June’s median sale price fell 0.6% from last year – marking the smallest decline in five months. 

Redfin  Chief Economist Daryl Fairweather called today’s housing market “extraordinary,” saying “it feels hot even though there are very few homes changing hands.”

“Sellers are getting multiple offers if their home is priced well and in a desirable area even though there aren’t a lot of buyers out there,” Fairweather said. “That’s because house hunters have so few homes to choose from. More buyers are starting to come out of the woodwork as they get used to elevated mortgage rates, which is making the market feel even hotter.”

The report said while mortgage rates are expected to decline as inflation cools, they won’t fall enough to bring a mass of sellers back to the market, meaning housing inventory will likely remain low for some time to come. But when they do fall, prospective buyers will likely see home prices jump. In affordable markets like Rochester, N.Y.; Milwaukee; and Omaha, Nebraska, prices are climbing relatively quickly, the report found. 

Pending home sales rose 1.9% from May to June, marking the largest monthly increase since October 2021 and the highest sales pace since last fall. June was also the third month in a row pending home sales climbed, following 16 months of declines. However, year over year, pending home sales fell 16.2%, the smallest annual decline in a year. 

“Homebuyer demand has bottomed out,” Fairweather said. “High rates are still giving a lot of buyers pause, but the sticker shock is no longer as severe as it was when rates skyrocketed last year. With home prices back near record highs, buyers are also less worried that they’ll buy a house that’ll plunge in value.”

Closed sales fell last month, down 19.8% from 2022, the lowest they’ve been since May 2020. Month over month they fell 3%.

The lack of inventory is starting to fuel bidding wars in some markets. The total number of homes for sale fell 15% from last year to a new all-time low for June, marking the biggest decline in nearly two years, according to the report. 

From June 2022, new listings fell 30.6% to 450,000, “the lowest level and largest annual decline on record aside from April 2020” at the onset of the pandemic, the report said. 

As has been the case for the past few months, homeowners are staying put rather than taking on a higher mortgage rate.