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Homes sold below their list price at the peak of the housing season, a shift that could tip the real estate market in favor of buyers, according to Redfin.
During a four-week span in May and June, the typical home sold for 0.3% less than its asking price, Redfin reports. This is significant because, in the past few years, homes usually sold at or above list price during this peak season. This year, that trend has changed.
Daryl Fairweather, Redfin’s chief economist, says, “The housing market is starting to move to the buyer’s favor.” Redfin also found that fewer than one-third of homes – 32% – sold over list price in the four weeks ending June 23. This is the lowest rate for late spring since 2020, signaling good news for buyers but not so much for sellers.
Ryan Sypek, a broker associate at Compass real estate in Los Angeles, observes that “buyers have the power” now, a notable change after months of a challenging market for buyers. Prices and mortgage rates have been high, with a shortage of new homes and homeowners reluctant to sell due to low interest rates on their current mortgages.
Earlier this year, Fairweather described the market as “the least affordable housing market in recent memory” for homebuyers. However, the market has recently loosened up a bit for buyers. New listings are up 8.2% from a year ago, and 62% of listings in May had been on the market for at least 30 days, compared to 50% two years earlier. “During the pandemic, I had a house that had 60 offers on it,” Sypek recalls. “Now, if I have a listing, I’m lucky if I’m getting four.”
Economists suggest that sellers may be setting their asking prices too high, not realizing they’re entering a buyer’s market. Fairweather explains, “People are setting prices based on what they saw their neighbors’ homes sell for three or four months ago, and maybe that was when there were more buyers on the market.” During much of the pandemic, sellers enjoyed bidding wars, a trend that is now reversing.
Danielle Hale, chief economist at Realtor.com, notes, “The last couple years, it became normal for sellers to get more than the asking price, but that was really an aberration fueled by high demand and low inventory.” Now, inventory is rising, with the number of listings up 37% from June 2023 to June 2024, marking the eighth consecutive month of growth.
“We’re starting to see more affordable homes on the market,” Hale says, which is a welcome trend for buyers. The median sale price is at a record $397,250, nearly 5% higher than a year ago, and the average interest rate for a 30-year fixed mortgage is 7.4%, double the rate from the start of 2022. This puts the typical homebuyer’s monthly payment at $2,785.
During the pandemic, homes often sold well above asking price. Now, with rising inventory and homes sitting unsold, buyers have more options. Sypek notes a “lack of urgency” from buyers, which historically drives prices up. He also cautions that the national real estate market is a constellation of smaller markets, each with its own trends.
In some regions, like Seekonk, Massachusetts, and outside Philadelphia, homes are still selling above asking price. Jess Clegg, a broker-owner at Next Nest Real Estate, recently closed on two homes that sold for $38,000 and $76,000 over asking. Michael Maerten, chairman of the Board of Tri-County Suburban REALTORS, notes that local sellers have reaped 102.7% of asking price in the last 30 days.
The key for sellers is to price their homes appropriately. “If you’re pricing your home appropriately,” Clegg advises, “then you’re going to sell for over list.”
Stay tuned for more updates as the real estate market continues to evolve!
Original article by Daniel de Visé USA TODAY can be found at Why the housing market is getting better for buyers (usatoday.com)
