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May 9, 2022
The share of home sellers dropping their asking prices has risen to a six-month high. The percentage is still low, but the quicker pace of price drops is notable, researchers say.
For the four weeks ending May 1, 15% of home sellers dropped their asking prices, up from 9% a year earlier, according to new research released by Redfin.
More home buyers may be starting to feel priced out by the rapid rise in mortgage rates, which may be making sellers have to adjust slightly. The 30-year fixed-rate mortgage averaged 5.27% last week, up from 2.96% just one year ago, Freddie Mac reports. Meanwhile, the median existing-home price in March was $375,300, up 15% from a year ago, according to the National Association of REALTORS®.
Housing affordability is declining as monthly mortgage payments increased by nearly 10%; the median family income increased by just 1.1% in comparison, according to NAR’s housing affordability index, reflecting March data.
“Home buyers continue to be squeezed in nearly every way possible, which is causing some to take a step back from the market,” says Daryl Fairweather, Redfin’s chief economist. “Unfortunately for buyers hoping to find a deal as competition cools, sellers are pulling back even faster, which is keeping the market deep in seller’s territory. So even though price drops are becoming more common, most homes are still selling above asking price and in record time.”
Indeed, even as mortgage rates climb, sellers are finding they have an advantage. They still don’t have that much competition, and with low inventories, they’re finding they can continue to sell for a premium.
Source: “Housing Market Update: More Sellers Drop Their Prices, But Buyers Find Little Relief,” Redfin (May 6, 2022) and “Instant Reaction: Jobs, May 6, 2022,” National Association of REALTORS® Economists’ Outlook blog (May 6, 2022); and “Housing Affordability Conditions Take a Hit in March,” National Association of REALTORS® Economists’ Outlook blog (May 6, 2022)