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2024’s Housing Market Where Homes Are Selling Below Asking Price – Norada Real Estate Investments

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Forget bidding wars! The housing market cools down in 2024. Homes selling below asking price for the 1st time since 2020. Is it a buyer’s market now? Well, the typical U.S. home sold during the four weeks ending June 23 for 0.3% less than its asking price.

According to Redfin, this marks a significant change as it is the first time homes have sold under the list price at this time of year since the onset of the pandemic in 2020. Last year, the typical home sold for exactly its asking price, and two years ago, homes were selling for approximately 2% above their list price.


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Housing Market Trends – June 2024

Sale Price Dynamics

During this period, just under one-third (32.3%) of U.S. homes sold over their asking price. This is the lowest share for late spring since 2020 and represents a decrease from 36% a year earlier. Additionally, nearly 7% of home sellers reduced their asking price, marking the highest level since November 2022, up from 4.7% a year ago.

Supply and Demand Imbalance

The likelihood of homes selling below asking price is increasing due to a supply-demand imbalance. New listings have increased by 8.2% year over year nationwide, while pending home sales have decreased by 4.3%, the largest decline in four months. A significant portion of the inventory is growing stale, with over 60% of homes listed for at least a month without going under contract.

Buyer Hesitation

Buyers are hesitating due to high housing costs. The median home-sale price has risen by 4.9% year over year, reaching an all-time high of $397,250. While mortgage rates have decreased slightly from May’s six-month high, the weekly average remains near 7%. The typical homebuyer’s monthly payment is approximately $2,785, just about $50 below the record high.

Impact of Weather

Record-breaking heat has also contributed to buyer reluctance. Joe Hunt, a Redfin manager in Phoenix, noted that some clients have avoided home viewings due to the extreme heat. However, he believes lower mortgage rates would likely counteract this effect.

Future Market Trends

Buyers may soon see some relief in costs. The increasing likelihood of homes selling below asking price, coupled with a high number of sellers dropping their prices, suggests that sale-price growth might slow down. Additionally, if inflation continues to cool, mortgage rates could decrease further.

Advice for Buyers and Sellers

Redfin agents recommend that both buyers and sellers remain realistic about prices. Sellers should avoid overpricing their homes, while buyers should understand that they may have room to negotiate, particularly if a home has been on the market without much activity for a few weeks.

Marije Kruythoff, a Los Angeles Redfin Premier agent, emphasized the importance of considering the specific property and its location. She explained that the most sought-after properties are either move-in ready or complete fixer-uppers. Homes that are somewhat nice but not fully updated tend to stay on the market longer. Sellers of these homes might benefit from making cosmetic repairs before listing, a service offered through Redfin Concierge Service. On the other hand, buyers encountering such listings should consider negotiating.

Leading Housing Market Indicators

Mortgage Rates

As of June 26, the daily average 30-year fixed mortgage rate stands at 7.06%. This rate has increased from a 3-month low of 6.97% a week earlier, but it is down from a 5-month high of 7.52% six weeks ago. Year over year, the rate is up from 6.91% according to Mortgage News Daily. The weekly average 30-year fixed mortgage rate, ending June 20, was 6.87%, the lowest level since the week ending April 4, up from 6.67% a year ago as reported by Freddie Mac.

Mortgage-Purchase Applications

Seasonally adjusted mortgage-purchase applications have increased by 1% from a week earlier as of the week ending June 21. However, they are down 13% year over year, based on data from the Mortgage Bankers Association.

Redfin Homebuyer Demand Index

The Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents, has risen by 5% from a month earlier as of the week ending June 23. Despite this increase, the index is down 14% compared to the previous year.

Touring Activity

Touring activity, as recorded by ShowingTime, has increased by 27% from the start of the year as of June 23. At this time last year, touring activity was also up by 15% from the beginning of 2023.

Google Searches for “Home for Sale”

Google searches for “home for sale” have remained unchanged from a month earlier as of June 24 but are down 15% year over year.

Key Housing-Market Trends – Four Weeks Ending June 23, 2024

Redfin’s national metrics, based on data from over 400 U.S. metro areas, provide valuable insights into the housing market trends for the four weeks ending June 23, 2024.

Median Sale Price

The median sale price reached an all-time high of $397,250, representing a 4.9% year-over-year increase. This is the biggest increase since March.

Median Asking Price

The median asking price was $414,975, up 6.1% year-over-year. This is the largest increase since October 2022.

Median Monthly Mortgage Payment

At a 6.87% mortgage rate, the median monthly mortgage payment is $2,785, up 7.5% from last year but $54 below the all-time high set during the four weeks ending April 28.

Pending Sales

Pending sales dropped to 85,246, a 4.3% decrease, marking the biggest decline in four months.

New Listings

New listings increased to 100,545, up 8.2%, which is the largest increase in two months.

Active Listings

Active listings rose to 953,300, an increase of 16.9% year-over-year.

Months of Supply

The months of supply increased by 0.6 points to 3.3. A supply of 4 to 5 months is considered balanced, with a lower number indicating seller’s market conditions.

Share of Homes Off Market in Two Weeks

The share of homes that went off the market within two weeks decreased to 41.4%, down from 46% last year.

Median Days on Market

The median days on market increased by 4 days to 31 days.

Share of Homes Sold Above List Price

The share of homes sold above list price decreased to 32.3%, down from 36% last year.

Share of Homes with a Price Drop

The share of homes with a price drop increased by 2 points to 6.7%, the highest level since November 2022.

Average Sale-to-List Price Ratio

The average sale-to-list price ratio decreased by 0.3 points to 99.7%.

Summary:

The housing market in June 2024 presents a complex picture for both buyers and sellers. While the median sale price has reached a record high, other indicators suggest a potential cooling of the market. Increasing supply and the rising share of homes selling below asking price may provide some relief for buyers, while sellers must adjust expectations and consider strategic pricing and home improvements.


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