One In Five Home Sellers Is Now Dropping Their Asking Price As The Housing Market Cools

One In Five Home Sellers Is Now Dropping Their Asking Price As The Housing Market Cools

Diana Olick

 

One In Five Home Sellers Is Now Dropping Their Asking Price As The Housing Market Cools

The median listing price in August was 14% lower than August of 2021 and nearly 42% lower than August of 2019.

Home sellers are getting nervous, as the once hot housing market cools fast.

One in five sellers in August dropped their asking price, according to Realtor.com. A year ago that share was just 11%.

The average home sold for less than its list price for the first time in more than 17 months during the four-week period ended Aug. 28, according to a report by Redfin.

Homes are simply not selling at the breakneck pace they were six months ago when strong demand butted up against tight supply, bidding wars were the norm, and a seller could often get a signed contract in under a weekend. Homes in August sat on the market an average of five days longer than they did a year ago — the first annual increase in time on the market in over two years.

The supply of homes for sale is also rising fast, up nearly 27% from a year ago, even as fewer sellers decide to list. Pending sales in July, which represent signed contracts on existing homes and which are the most recent sales data available, were nearly 20% lower than July 2021, according to the National Association of Realtors.

“For many of today’s buyers, the uptick in for-sale home options is taking away the sense of urgency that they felt during the past two years, when inventory was scarce,” said Danielle Hale, chief economist for Realtor.com. “As a result of this shift, coupled with higher mortgage rates, competition continued to cool in August, with listing price trends indicating that home shoppers are tightening their purse strings.”

The median listing price in August was 14% lower than August 2021 and nearly 42% lower than August 2019, before the coronavirus pandemic caused a mad rush on housing, according to Realtor.com.

Mortgage rates have been rising since January, hitting a recent high in June and then falling back slightly in July and much of August. They are, however, rising again and are now nearly matching that June high.

Redfin reported that requests for home tours and other home-buying services from its agents at the end of August was down 16% from the same period the year before. Touring activity was also down 9% from the start of the year, compared with an 11% increase at the same time last year, according to home tour technology company ShowingTime.

“The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight,” said Daryl Fairweather, Redfin’s chief economist. “Expect homes to linger on the market, which may lead to another small uptick in the share of sellers lowering their prices.”

Source: nbcnews.com

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Prices falling in expensive cities

In two-thirds of major regional housing markets — 98 out of 148 — prices continue to drop, especially in more expensive locations.

We may see expensive markets fall further, which if that happens sooner than later, would make it an excellent time to buy into an expensive market. This wouldn’t have registered as a possibility even a few months back.

It’s difficult to predict if this will happen. And if so, whether falling prices become offset by the federal interest rate hikes practically certain to arrive in the coming months.

The only way to know for sure is to wait until the latest rate hike sets in.

Meanwhile, keep in mind that — as with any investment — it’s best time to buy is usually when prices are low.

‘Deals to be had:’ Homebuyers Should Ask For These Incentives While They Have The Upper Hand

The days of waiving contingencies such as appraisals and forgoing inspections are fading into the rearview mirror. Still, contract activity remains slightly competitive depending on your location.

At least 24% of buyers waived the inspection contingency in December 2022, according to the National Association of Realtors confidence survey, up from 16% a month prior and 19% one year ago. An additional 24% of buyers waived an appraisal contingency in December, up slightly from 16% in November and 21% a year ago.

Home inspection contingencies are particularly important because it can let you know if there’s a deal-breaking issue with the property before a purchase occurs. It can also help you negotiate repairs with the seller, which is becoming increasingly common in today’s market.

“If buyers have this short window to buy where they can get incentives to purchase, [they] would rather buy where they have an opportunity to really think about it, get an inspection, a financing contingency and not feel rushed,” Jeff Reynolds, broker at Compass and founder of UrbanCondoSpaces.com, told Yahoo Finance.