Increase in price cuts could suggest housing market is cooling at last
Share of homes on the market that had their prices reduced reached a four-month high in March
After a year marked by bidding wars and above-ask offers, a new report has some welcome news for homebuyers: Price chops are coming back.
In the four weeks ending April 3, 12 percent of homes listed for sale in the U.S. had their prices reduced, according to Redfin, up from 9 percent a year ago and the highest mark in four months.
While that metric is only one data point — and price drops remain exceedingly rare — Redfin chief economist Daryl Fairweather suggested it may be a sign that the market is finally turning in buyers’ favor.
“It goes to show that there’s a limit to sellers’ power,” Fairweather wrote in the report. “There is still way more demand than supply, and buyers are still sweating, but sellers can no longer overprice their home and still expect buyers to clamor at their door.”
Though supply remains low in the housing market, mortgage rates are surging, potentially tempering demand as fewer prospective buyers apply for financing. As a result, sellers may be prompted to lower their asking prices or risk having their home languish on the market.
Still, buyers don’t have a lot to celebrate yet, as prices continue to rise and available homes keep flying off the market. For the four-week period ending April 3, Redfin found that the median home price hit a record of $384,500. Monthly mortgage payments on median-priced homes also rose to a record $2,245 at a 4.72 percent rate.
A record 59 percent of homes that went under contract had an offer accepted within two weeks of hitting the market, while a record 45 percent had an accepted offer within one week. Homes that sold were on the market for a median of just 19 days.
“Buyers should be wary of bidding significantly over asking on newly listed homes, and to take a closer look at the homes that have been on the market for more than a week,” Fairweather wrote.