Across the US, 6.4% of sellers issued a price cut in the month leading up to May 26, a real estate listing site said in a recent report
Home prices are dropping at the fastest pace in over a year, thanks to demand slumping amid stubbornly elevated mortgage rates, according to Redfin.
Across the US, 6.4% of sellers issued a price cut in the month leading up to May 26, the real estate listing site said in a recent report. That is the highest percentage of sellers that have cut prices since November 2022, when the 30-year fixed mortgage rate soared past 7% for the first time in over 20 years.
Price cuts have been sharp enough to lower the average US home price, which recently notched a new record. The median price for a home dropped $3,000 last week to $416,623, as per Redfin data. That’s the first drop logged so far in 2024, though home prices are still nearly 4% higher year-over-year, it stated.
Together, those metrics indicate sale-price growth could weaken in the coming months as persistently high mortgage rates turn off homebuyers, the report said.
The 30-year fixed mortgage rate has risen, soaring past 7% in the last week of May, as per Freddie Mac data.
High borrowing costs have been a major deterrent to prospective home buyers, many of whom are choosing to wait out the market until rates drop.
The market is slower than usual, Christine Chang, a California-based Redfin agent said in a statement. People who are buying right now are typically doing so because they are having a baby or looking for a more family friendly home.
That pullback has helped ease the imbalance of supply and demand, given that the shortage of inventory pushed home prices up for most of the past year. Redfin data shows that pending home sales are now down 3% YoY, while new listings are 7.8% higher.
Real estate experts are generally expecting the housing market to become more affordable in the coming years, as more inventory makes its way to the market and borrowing costs ease. Home prices have probably peaked, as per Charles Schwab strategists, who are expecting a “stabilization” in sales and price growth ahead.
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