Home Prices Hit New High
Buyers Gain Power as Stale Listings Pile Up and Price Drops Become Common
By Dana Anderson
Housing costs could come down in the coming months, as mortgage rates are coming down a bit and there are signs price growth could slow. Redfin agents report there is room for buyers to negotiate paying under list price for homes that need a bit of work.
Pending sales post their biggest decline since the beginning of March // Pending home sales fell 3.8%, the biggest year-over-year decline in nearly four months, during the four weeks ending June 16. Buyers are shying away from earlier steps in the house-hunting process, too: Redfin’s Homebuyer Demand Index, a measure of requests for tours and other buying services from Redfin agents, declined 17% year over year to its lowest level since February.
Buyers are backing off largely because housing costs are high // The median U.S. home-sale price is up 4.8% to an all-time high of $396,000, and the median monthly mortgage payment is $2,781, about $60 below its record high. The weekly average mortgage rate declined slightly to 6.95% this week, but it’s still more than double pandemic-era lows.
The irony of near-record-high housing costs // They are causing buyers to back off, and enough have backed off to give buyers who remain more negotiating power for certain homes. The other piece of good news for buyers is that housing costs could come down soon. There are signs that price growth could lose some momentum: The share of sellers dropping their list price is at its highest level since November 2022, and asking-price growth has already slowed. Mortgage rates have fallen a bit since last week’s cooler-than-expected inflation report, and they may continue declining.
New listings are still near historic lows // Another reason for the decline in pending sales is a lack of new, desirable listings for buyers to choose from. New listings are up 7.7% year over year, but they’re sitting well below typical levels for this time of year; the only time on record listings June listings have been lower was in 2023.
Many home listings are becoming stale, sitting on the market for 30 days or longer without going under contract; Redfin agents report that most buyers are willing to pay sky-high housing costs only for move-in ready homes in popular neighborhoods.
“A few years ago, I never would have told a seller they need to freshen up their paint, fix their furnace and make sure their roof is up to date before putting their home on the market — but now, I tell them to make the house as pretty as they possibly can,” said Des Bourgeois, a Redfin Premier agent in the Detroit area. “Buyers are still out there and they’re willing to pay today’s high prices, but only if the house is in really good shape. They don’t want to spend extra money on paint or new appliances.”
Homes that need work and/or aren’t in the most desirable locations can be a good opportunity for today’s buyers // They are selling under asking price in some places–if they do sell. “Things have reversed since the pandemic,” said Jonathan Ader, a Redfin Premier agent in the Palm Springs, CA area. “Now, most homes — the exception is relatively affordable homes that are move-in ready — are selling under asking price.”
