Redfin Reports Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand

Rhea-AI Summary

Redfin reports that 6.4% of home sellers in the U.S. reduced their asking prices in the four weeks ending May 26, 2024. This is the highest percentage since November 2022, suggesting a potential softening in sale-price growth due to high mortgage rates. The median asking price dropped by $3,000 to $416,623, the first decline in six months. However, the median sale price hit a record high of $390,613, up 4.3% year-over-year. Despite this, pending sales fell by 3.4%, and mortgage-purchase applications are near their lowest level in six months. The median monthly mortgage payment is now $2,812, down from peak levels as mortgage rates recently dipped below 7%. Inventory is growing stale, and listing growth has slowed. Redfin advises buyers to consider less trendy neighborhoods or condos to avoid bidding wars.

Positive

• Median sale price up 4.3% year-over-year, reaching $390,613.
• Median asking price, despite a recent drop, remains high at $416,623.
• Median monthly mortgage payment decreased to $2,812, down from recent highs.
• Weekly average mortgage rate fell to 6.94%, below 7% for the first time since early April.
• Touring activity increased by 10% from the start of the year.

Negative

• 6.4% of home sellers reduced their asking prices, the highest since November 2022.
• Pending sales down 3.4% year-over-year.
• Mortgage-purchase applications near their lowest level in six months.
• Active listings on the market for 46 days, up from previous periods.
• Share of homes sold above list price decreased to 31.8% from 34%.
• Age of inventory rising, indicating properties are staying longer on the market.

Insights

Financial Analyst

The latest data from Redfin reveals a significant shift in the housing market, with 6.4% of home sellers cutting their asking prices—the highest rate in 18 months. This suggests a potential softening in sale-price growth due to persistently high mortgage rates, which have now slightly dipped below 7%. While the median sale price still hit a record $390,613, the market is showing signs of cooling, particularly evidenced by the increased age of inventory and a higher share of homes with price drops.

For investors, this means the housing market may be reaching a pivotal point where growth slows and price adjustments become more common. The median asking price decline of $3,000 offers a signal that sellers are becoming more flexible, likely due to decreasing demand driven by high borrowing costs. The drop in pending sales by 3.4% and the low mortgage-purchase applications further underscore the cooling demand.

One key takeaway is the typical U.S. homebuyer's monthly payment, which dropped to $2,812, its lowest level in six weeks. While this offers some relief, it is essential to note that it remains high enough to price out certain buyers. The balance between mortgage rates and housing affordability will continue to be a critical factor for market stability in the coming months.

Investors should monitor these metrics closely. The increase in the number of new listings and the growing inventory could provide more opportunities for buyers and might influence future pricing trends.

Real Estate Market Analyst

Redfin's report highlights several notable trends that could impact the real estate market in both the short and long term. The rise in the median age of inventory to 46 days suggests homes are staying on the market longer, reflecting a decrease in buyer activity. This is a critical indicator for investors as it signals a potential buyers' market if the trend continues.

The decrease in mortgage rates below 7%—though potentially short-lived—has provided some breathing room for buyers. However, the modest decline in monthly housing payments is insufficient to counteract the broader trend of affordability challenges. This situation is compounded by a 7.8% increase in new listings, which, while higher than the previous year, has been losing momentum, indicating that sellers are cautious about flooding the market.

Market differentiation is also evident, with certain metro areas like San Jose and Anaheim showing significant increases in both median sale prices and pending sales, whereas others like Houston and Atlanta are experiencing declines. This divergence suggests that local economic conditions and housing supply dynamics play a important role in shaping regional market outcomes.

In summary, the current data points to a market in flux, with high variability across different regions. Investors should consider both national trends and local market conditions when making decisions.

More home sellers are cutting their asking price, suggesting sale-price growth could soften in the coming months. But this week, the median sale price rose to another record high, pricing out some buyers.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN)—Nationwide, 6.4% of home sellers cut their asking price during the four weeks ending May 26, on average, the highest share since November 2022. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

The median asking price dropped roughly $3,000 to $416,623 in the last week, the first decline in six months. Additionally, for-sale supply is growing more stale: Age of inventory (the typical number of days active listings have been on the market) started rising year over year in May for the first time in eight months, hitting a median of 46 days. Together, those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high, though sale prices are a lagging indicator because they’re typically negotiated at least a month before a deal closes.

Buyers did get a modicum of relief on housing costs this week. The typical U.S. homebuyer’s monthly housing payment dropped to $2,812, its lowest level in six weeks. Payments are declining because even though sale prices remain at all-time highs, mortgage rates have come down from their peak: The weekly average mortgage rate is 6.94%, the first time it has dipped below 7% since early April. (It’s worth noting that the reprieve in rates may be short-lived; daily average rates started increasing this week after a string of disappointing treasury auctions.)

High costs are dampening demand. Pending sales are down 3.4% year over year, on par with declines over the last month, and mortgage-purchase applications are sitting near their lowest level in six months. Low inventory is another factor pushing down sales. Even though 7.8% more new listings hit the market than during the same period last year, listing growth has been losing momentum for the last few months, leaving buyers with fewer homes to choose from than there typically are in May.

“The market is slower than usual, but well-maintained properties listed for under a million dollars still get multiple offers,” said Christine Chang, a Redfin Premier agent in the Bay Area. “People who are buying right now are typically doing so because they’re having a baby or looking for a more family friendly home. My advice for those buyers is to be open-minded: Consider single-family homes that are a bit outdated but don’t need major renovations, and/or homes in lesser-known, non-trendy neighborhoods. That type of home tends to sit on the market longer, and buyers may be able to avoid competition and get a home for asking price instead of engaging in a bidding war. Buyers who can get by with less space should consider a condo; they’re relatively unpopular right now and many are going under asking price.”

For Redfin economists’ takes on the housing market, including more on how current financial events are impacting mortgage rates, please visit Redfin’s “From Our Economists” page.

Leading indicators

Indicators of homebuying demand and activity
	Value (if applicable)	Recent change	Year-over-year change	Source
Daily average 30-year fixed mortgage rate	7.34% (May 29)	Up from 6.99% 2 weeks earlier, but down from a 5-month high of 7.52% 5 weeks earlier	Up from 6.95%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	6.94% (week ending May 23)	Down from 5-month high of 7.22% 3 weeks earlier	Up from 6.57%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Declined 1% from a week earlier (as of week ending May 24)	Down 10%	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Down 7% from a month earlier to lowest level in 3 months (as of week ending May 23)	Down 12%	Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents
Touring activity		Up 10% from the start of the year (as of May 27)	At this time last year, it was up 12% from the start of 2023	ShowingTime, a home touring technology company
Google searches for “home for sale”		Unchanged from a month earlier (as of May 28)	Down 14%	Google Trends

Key housing-market data

U.S. highlights: Four weeks ending May 26, 2024 Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.
	Four weeks ending May 26, 2024	Year-over-year change	Notes
Median sale price	$390,613	4.3%	All-time high
Median asking price	$416,623	6%
Median monthly mortgage payment	$2,812 at a 6.94% mortgage rate	7.3%	$58 below all-time high set during the 4 weeks ending April 28
Pending sales	89,218	-3.4%
New listings	101,172	7.8%
Active listings	912,320	15.2%	Highest level since Dec. 2022
Months of supply	3.2	+0.5 pts.	4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions
Share of homes off market in two weeks	44.7%	Down from 49%
Median days on market	32	+3 days
Share of homes sold above list price	31.8%	Down from 34%
Share of homes with a price drop	6.4%	+2 pts.	Highest level since Nov. 2022
Average sale-to-list price ratio	99.5%	-0.2 pts.

Metro-level highlights: Four weeks ending May 26, 2024 Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.
	Metros with biggest year-over-year increases	Metros with biggest year-over-year decreases	Notes
Median sale price	Anaheim, CA (19.3%) Detroit (16.4%) Nassau County, NY (12.5%) San Jose, CA (12.4%) West Palm Beach, FL (12.4%)	Fort Worth, TX (-0.4%) San Antonio, TX (-0.3%)	Decreased in 2 metros
Pending sales	San Jose, CA (13.7%) San Francisco (7.2%) Columbus, OH (6.5%) San Diego (5.3%) Anaheim, CA (4.2%)	Houston (-15.1%) West Palm Beach, FL (-14.4%) Atlanta (-14.1%) Fort Lauderdale, FL (-12.5%) Orlando (-11.5%)	Increased in 13 metros
New listings	San Jose, CA (34.5%) Phoenix (24.7%) San Diego (21%) Oakland, CA (20.1%) Montgomery County, PA (19.5%)	Chicago (-10%) Atlanta (-9.4%) Newark, NJ (-6.4%) Detroit (-3.4%) Warren, MI (-1.9%)	Decreased in 8 metros

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-sellers-drop-asking-prices

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240530263072/en/

Redfin Journalist Services:

Kenneth Applewhaite

press@redfin.com

Source: Redfin

FAQ

What percentage of home sellers reduced their asking prices recently?

6.4% of home sellers reduced their asking prices in the four weeks ending May 26, 2024.

What is the current median asking price for homes?

The current median asking price is $416,623.

How much did the median sale price increase year-over-year?

The median sale price increased by 4.3% year-over-year.

What is the current median monthly mortgage payment?

The current median monthly mortgage payment is $2,812.

What is the recent trend in mortgage-purchase applications?

Mortgage-purchase applications are near their lowest level in six months.

What is the current average mortgage rate?

The current weekly average mortgage rate is 6.94%.

How long are active listings staying on the market?

Active listings are staying on the market for a median of 46 days.

What percentage of homes sold above the list price?

31.8% of homes sold above the list price.

What is the current state of pending home sales?

Pending home sales are down 3.4% year-over-year.