Due to mortgage rate hikes, sellers are increasingly dropping their asking prices in hopes of accommodating buyers BUT buyers are squashed, not relieved.
Share of Sellers Dropping their Asking Prices Hits 6-Month High
According to Redfin, 15% of home sellers dropped their asking prices, a six-month high, during the four weeks ending May 1. This 15% share is a big uptick, the largest since 2015, from the 9% share of home sellers who dropped their asking prices one year earlier.
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Homebuyers Are Squeezed
With the typical monthly mortgage payment skyrocketing +42% in these same four weeks ending May 1, Daryl Fairweather, Chief Economist with Redfin, said, “Homebuyers continue to be squeezed in nearly every way possible, which is causing some to take a step back from the market.”
Fairweather continued. “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.”
Homebuying Activity
- According to Google, home searches during the week ending April 30 were down -7% y/y
- Redfin’s Homebuyer Demand Index dropped -10% in the four weeks ending May 1
- Touring activity from the first week of January 2022 through May 1 dropped -24% y/y, according to
- Mortgage purchase applications dropped -11% y/y through May 1.
- The 30-year mortgage rates jumped to 5.27%, the highest level since August 2009, for the week ending May 5, according to the Mortgage Bankers Association.
Redfin’s Key Market Takeaways for 400+ US Metro Areas
- Median home sale price hit a record $396,125, an increase of +17% y/y
- Median asking price of newly listed homes jumped to $408,458, an increase of +16% y/y
- Monthly mortgage payment on median asking price home hit record high of $2,404 at the current mortgage rate of 5.27% (it’s more now) for the four-week period ending May 1. This monthly mortgage payment of $2,404 represents an increase of +42% y/y
- Pending home sales dropped -4% y/y, the largest decrease in pending home sales since mid-February 2022
- New home listings fell -6% y/y
- Active listings plunged -18% y/y
- A record 56% of homes sold above list price compared with 47% one year ago
- Overall, 14.9% of homes for sale dropped their list price in the four weeks ending May 1.
- The average sale-to-list price ratio increased to 102.8%, an all-time high.
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Thanks to Redfin, Google, ShowingTime and Mortgage Bankers Association.
