Real Estate Marketing & Beyond
Reports have emerged from real estate firms that some sellers have been lowering their asking prices, in the first sign that buyers may finally be getting a break in the red-hot housing market.
That’s according to a report from realtor.com last week, cited by CNBC. It said new listings the previous week rose 8% from a year earlier, following four straight weeks of annual declines. While the total active inventory in the residential real estate market is still down 13% from a year ago, the rise in new listings of late suggests that things may have bottomed out. Traditionally, new listings tend to peak in May.
That said, prices remain well above last year’s level. In addition, higher mortgage rates than a year ago mean houses become even more expensive for anyone who needs to finance a purchase. The average borrower is now paying 38% more on their monthly payment than they would have done for the same home one year ago.
The rise in inflation and related mortgage rate hike means many buyers have less flexibility in their budget to chase after newly listed homes. For those who still can persist, they may benefit from having less competition, which could in turn translate into relief from growing home prices.
With more supply of listings and mortgage rates rising fairly sharply, sellers appear to be in the mood for compromise, at least a little bit. Around 12% of listed homes during the four weeks ending April 3 lowered their asking price, up from just 9% of sellers one year ago.
“Price drops are still rare, but the fact that they are becoming more frequent is one clear sign that the housing market is cooling,” Redfin Chief Economist Daryl Fairweather. “It goes to show that there’s a limit to sellers’ power. 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.”
Mortgage News Daily reported that the interest rate really took off in the past few weeks, surpassing 5% last week. As a result, consumers are more pessimistic about the housing market than they have been for some time, according to a survey on the matter by Fannie Mae.
Now, 69% of consumers expect mortgage rates to rise further, up from 67% in March. A growing number of consumers also believe home prices will continue to make steady gains.
“If consumer pessimism toward homebuying conditions continues, and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast,” wrote Mark Palim, vice president and deputy chief economist at Fannie Mae.
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