Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand – Redfin News

More home sellers are cutting their asking price, suggesting sale-price growth could soften in the coming months. But this week, the median sale price rose to another record high, pricing out some buyers. 

Nationwide, 6.4% of home sellers cut their asking price during the four weeks ending May 26, on average, the highest share since November 2022. The median asking price dropped roughly $3,000 to $416,623 in the last week, the first decline in six months. Additionally, for-sale supply is growing more stale: Age of inventory (the number of days active listings have been on the market) started rising year over year in May for the first time in eight months, hitting a median of 46 days. Together, those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high, though sale prices are a lagging indicator because they’re typically negotiated at least a month before a deal closes. 

Buyers did get a modicum of relief on housing costs this week. The typical U.S. homebuyer’s monthly housing payment dropped to $2,812, its lowest level in six weeks. Payments are declining because even though sale prices remain at all-time highs, mortgage rates have come down from their peak: The weekly average mortgage rate is 6.94%, the first time it has dipped below 7% since early April. (It’s worth noting that the reprieve in rates may be short-lived; daily average rates started increasing this week after a string of disappointing treasury auctions.) 

High costs are dampening demand.  Pending sales are down 3.4% year over year, on par with declines over the last month, and mortgage-purchase applications are sitting near their lowest level in six months. Low inventory is another factor pushing down sales. Even though 7.8% more new listings hit the market than during the same period last year, listing growth has been losing momentum for the last few months, leaving buyers with fewer homes to choose from than there typically are in May. 

“The market is slower than usual, but well-maintained properties listed for under a million dollars still get multiple offers,” said Christine Chang, a Redfin Premier agent in the Bay Area. “People who are buying right now are typically doing so because they’re having a baby or looking for a more family friendly home. My advice for those buyers is to be open-minded: Consider single-family homes that are a bit outdated but don’t need major renovations, and/or homes in lesser-known, non-trendy neighborhoods. That type of home tends to sit on the market longer, and buyers may be able to avoid competition and get a home for asking price instead of engaging in a bidding war. Buyers who can get by with less space should consider a condo; they’re relatively unpopular right now and many are going under asking price.”

For Redfin economists’ takes on the housing market, including how current financial events are impacting mortgage rates, please visit Redfin’s “From Our Economists” page. 

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Refer to our metrics definition page for explanations of all the metrics used in this report.