Asking prices for newly listed homes begin to fall, according to a new report from redfin†
During the four-week period ending June 26, median selling price of a house rose 13.6% year-over-year to $399,249. The median asking price of newly listed homes was 14.7% higher than a year earlier, to $405,547. Still, the median asking price was 1.5% lower than a month earlier.
Sellers are adjusting their expectations in the wake of declining purchasing power of home buyers, due to a combination of rising mortgage rates and weakened stock markets. The monthly mortgage payment on the average asking price of the home rose to $2,459 at the current 5.7% mortgage rate. This is an increase of 45% compared to a year ago, when the mortgage interest rate was 2.98%.
A record share of home sellers also dropped their prices during the four-week period analysed, Redfin said. On average, 6.5% of homes for sale had a price drop, which is the highest share Redfin has ever recorded since it started tracking the stat in 2015. However, the share of homes sold above list price rose slightly year on year, from 53% in 2021 to 54% this year, but is 2.5 percentage points lower than in mid-May 2022.
“Data on tours, offers and mortgage purchases suggest that homebuyers have noticed the power shift and are no longer exiting the market en masse,” Daryl Fairweather, Redfin’s chief economist, said in a statement. “Buyers coming back will support the housing market, but between now and the end of the year I think power will continue to shift to buyers, resulting in mild month-to-month price declines.”
Despite lower asking prices, the Redfin report highlighted several signs of: declining demand from buyersincluding the number pending sale fell 13% year over year, the biggest drop since May 2020. In the week ending June 25, 7% fewer people searched for “homes for sale” google than a year earlier. In addition, home travel activity was down 3% from the start of the year on June 26, compared to a 24% increase a year ago, according to data from ShowTime† In addition, in the analyzed metropolises, 46% of the properties going under contract had an accepted offer on the market within the first two weeks, compared to 49% a year ago.
In addition to the decreasing demand for buying houses, there is also an increase in the stock. Redfin reported that the number of active ads fell by just 8% year-over-year, which is the smallest drop since March 2020. However, compared to the previous year, the number of new homes for sale was down 7%.
“Home buyers worry about interest rates, have to go back to the office, get fired and wonder if they can get a better deal waiting for the market,” Caroline Loudenback, a real estate agent in Redfin Seattle, said in a statement. “On the other hand, sellers are adapting to this new reality and learning that sometimes they can’t do much to increase buyer interest. It’s a tough market and you need to pay close attention to your local sales and offers to understand what’s happening.”