Categories: HousingNews

Sellers are dropping their asking prices as housing market slows

As signs of a real estate market slowdown grow across the country, many sellers are resetting their home price expectations.

Recent data suggests that both new home and existing home sales are falling, as well as pending home sales. The latter fell for the sixth consecutive month in April to its lowest pace in almost 10 years, according to a report from the National Association of Realtors last week.

Homes are still selling fast but a slowdown is evident in many markets. Amid rising mortgage rates that are pricing more buyers out, some home sellers are having to revisit their asking price.

Price drops are particularly more common in migration hotspots, places that have been relatively affordable but saw home values surge as more people have migrated in from coastal areas since the pandemic began, a new report from Redfin says. For example, in Boise, Idaho, home prices are up 62% over the past two years. In April, 41% of home sellers dropped their prices, the largest of 108 metro areas tracked by Redfin.

More than 20% of home sellers dropped their price in April in seven of the 10 most popular migration destinations, the report says. Other areas that are seeing a rise in price drops include Cape Coral, Fla. (at 33% in April); New Orleans (32%); Baton Rouge, La (31%); and Sacramento, Calif. (30%).

“Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,” said Daryl Fairweather, Redfin’s chief economist. “When mortgage rates were at or below 3%, both local and out-of-town home buyers were more willing and able to tolerate high prices, but at 5%, many are priced out. A home’s price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly.”

Lawrence Yun, NAR’s chief economist, said in a recent release on the latest housing data that higher mortgage rates have increased the cost of purchasing a home by more than 25% compared to last year. In many cases, that could mean the higher mortgage payments are leading up to $500 more per month for borrowers. Further, higher home prices add another 15% to that figure, Yun says. Also, households are facing rapid inflation that is increasing everyday costs, like fuel and food.

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

Recent Posts

Though inflation fell last month, housing costs kept rising

Having risen to its highest level in 40 years last June, inflation declined marginally at…

7 hours ago

Refinance applications jump on wild swings in mortgage rates

Mortgage rates last week rebounded, having dropped towards the end of July. As a result,…

1 day ago

Advantages of Real Estate Agents Having Their Own App

As a real estate agent, you may wonder if having your own app is worth…

1 day ago

How the Inflation Reduction Act Will Affect the Real Estate Industry

If you're new to home buying or you're looking to expand your real estate portfolio,…

1 day ago

Building Your Virtual Real Estate Dreams: How the Metaverse “Housing Boom” Might Change Everything

Real estate investors are always looking out for the next great market to corner. Most…

2 days ago

This Week’s Focus Is On Tampa Agents

This week we travel down to Tampa, Florida in search of the top real estate…

2 days ago