According to a new report from Redfin, after months of swinging in favor of sellers, the scales in the housing market are finally leveling out.
Soaring housing prices have caused many home hunters to give up in recent months, which is now providing relief to remaining buyers. Buyers today are seeing housing shortages easing, price growth slowing, competition waning and mortgage rates falling from their 2022 peak. The share of sellers cutting their asking prices has reached a record high in the four weeks ending July 3, and the share of homes above list price fell for the first time since June 2020 as sellers responded to lower demand from buyers.
“Conditions for home buyers are improving. Housing remains expensive, but mortgage rates just posted their biggest weekly drop since 2008, making buying a home a little more affordable,” said Redfin chief economist Daryl Fairweather. “One of the ways buyers can take advantage of market changes is to demand concessions from sellers. This could include asking the seller to buy out your mortgage rate, pay for repairs, or cover some of your closing costs.
Leading indicators of home buying activity:
- For the week ending July 7, 30-year mortgage rates fell to 5.3%, the largest one-week decline since 2008. This is down from the 2022 high of 5, 81%, but up from 3.11% at the start of the year.
- Fewer people searched for “homes for sale” on Google – searches in the week ending July 2 were down 2% from a year earlier.
- The seasonally adjusted Redfin Homebuyer Demand Index – a measure of requests for home visits and other homebuying services from Redfin agents – was down 15% year over year. another during the week ending July 3.
- Touring activity as of July 3 was down 14% from the start of the year, compared with a 7% increase in the same period last year, according to home touring technology company ShowingTime.
- Mortgage purchase requests were down 17% year-on-year in the week ending July 1, while the seasonally adjusted index was down 4% week-over-week .
“The slowing market is giving buyers more opportunities to negotiate, especially with sellers whose homes have been on the market for a while,” said Jessica Nelson, a real estate agent from Columbia, South Carolina. “I tell my sellers that they need to price their homes realistically from the start. If they don’t, their home may end up on the market and they may have to lower their price, maybe more than once, to attract buyers.
Housing Market Highlights for 400+ U.S. Metro Areas:
- The median home sale price rose 13% year over year to $396,000. This growth rate is down from the March peak of 16%.
- The median asking price for newly listed homes rose 15% year-over-year to $399,973, but was down 2.1% from the all-time high reached in the four-month period. weeks ending June 5.
- The monthly mortgage payment on the median asking price reached $2,342 at the current mortgage rate of 5.3%, up 40% from $1,668 a year earlier, when mortgage rates were 2.9% . This is down slightly from the high of $2,487 hit in the four weeks ending June 12.
- Pending home sales fell 13% year-over-year, the biggest drop since May 2020.
- New home listings for sale were down 1.4% from a year earlier.
- Open listings (the number of homes listed for sale at any time during the period) fell 2% year over year, the smallest drop since October 2019.
- 45% of homes under contract had an offer accepted within the first two weeks on the market, compared to 49% a year earlier.
- 32% of homes under contract had an offer accepted within a week of being put on the market, compared to 35% a year earlier.
- Homes sold were on the market for a median of 18 days, flat from a year earlier and slightly up from the record 15-day low set in May and early June.
- 52% of homes sold above the list price, compared to 53% a year earlier. This metric peaked in mid-May and has fallen 3.8 points since then.
- On average, 7% of homes for sale each week saw a price drop, a record as far back as the data goes, until early 2015.
- The average sale price to listing price ratio, which measures how well homes are selling relative to their asking price, fell to 101.9%. In other words, the average home sold for 1.9% above its asking price. This figure was down from 102.2% a year earlier.
To view the full report, including charts and methodology, click here.