Housing market activity is buzzing as more home sellers are lowering their asking prices, new listings are jumping, interest rates are rising, and inflation hit 8.5%.
Home Sellers Beginning to Lower Their Asking Prices
Several new real estate reports “suggest” that buyers may be getting a bit of a reprieve from the staunch seller’s market. More listings are surfacing and some sellers are even lowering their asking prices.
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According to Realtor.com, the number of new listings of for-sale homes jumped +8% last week. Granted, active for-sale listings are still down -13% y/y, but, with new listings tending to peak in May, some believe that the number of new listings may be higher this summer than the for-sale listings last summer.
Redfin’s latest report weighed in on recent listing price drops. About 12% of for-sale homes had a price drop during the four weeks ending April 3. A year ago during this same time period, 9% of available for-sale homes had a price drop.
“Price drops are still rare,” said Redfin’s Chief Economist Daryl Fairweather, “but the fact that they are becoming more frequent is one clear sign that the housing market is cooling.”
Fairweather added, “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.”
Buyers’ Concerns Remain Legitimate
Interest rates crossed the rubicon of 5% last week and jumped to 5.25% this week, according to Mortgage Daily News. Consumers are not happy about it. The result? Consumers are now more pessimistic about the housing market due to rising interest rates than they were last month.
According to the latest monthly survey on consumer sentiment done monthly by Fannie Mae, the share of consumers who anticipate mortgage rates to continue rising grew to 69% in April from 67% in March. Likewise for home prices.
Mark Palim, vice president and deputy chief economist with Fannie Mae, wrote, “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.”
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