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Redfin Reports a Record Share of Home Sellers Drop Prices as High Rates Cut Into Buyers’ Budgets

November 3, 2023 8:00 AM

Budgets are getting some relief right now, with daily average rates dropping considerably over the last week, from 8% to 7.5%.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) —Nearly 7% of for-sale homes posted a price drop during the four weeks ending October 29, on average, the highest portion on record. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

The record comes as mortgage rates hover at elevated levels, hitting their highest level in 23 years last week and cutting deep into buyers’ budgets. High rates have forced some sellers to lower their asking price to make up for high interest rates on monthly payments. It’s worth noting that buyers are getting a bit of relief this week, at least temporarily: Economic events sent daily average mortgage rates from 8% down to 7.5% over the last week.

Sale prices are still up 3% from a year ago. That’s partly because sale-price data is a lagging indicator, reflecting deals that went under contract a month or two ago. Growth in sale prices may slow in the coming months as it starts to reflect sales that went under contract as mortgage rates hit 8% in October.

Another reason for rising sale prices is that despite slow demand, low inventory is propping up prices. The total number of homes for sale is down 10% year over year; new listings are up 1% from a year ago—just the second increase since July 2022—but that’s partly due to new listings falling quickly at this time last year. Price drops becoming more prevalent than ever while prices continue increasing illustrates today’s bizarre housing market. Redfin agents describe a mismatch between sellers’ high expectations and the reality of buyers’ budgets, saying it’s more important than ever for sellers to price fairly from the start to attract buyers and sell quickly.

“Some sellers are pricing too high because they have FOMO after their neighbor’s house sold well over asking price two years ago,” said Seattle Redfin Premier agent Patrick Beringer. “While low inventory is driving some competition and relatively affordable homes in popular neighborhoods are still selling fast, they’re getting two or three offers as opposed to 20 offers at the height of the market. With mortgage rates in the 7.5% to 8% range, buyers simply don’t have the budget they would have had two years ago or even one year ago.”

In the Seattle metro, for instance, the typical homebuyer’s monthly mortgage payment is $232 more than it would have been a year ago. It’s nearly $2,000 more than it would have been two years ago.

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

7.51% (Nov. 2)

Down from 7.9% a week earlier

Up from 7.09%

Mortgage News Daily

Weekly average 30-year fixed mortgage rate

7.76% (week ending Nov. 2)

Down slightly from 7.79% a week ago; still near highest level in 23 years

Up from 7.08%

Freddie Mac

Mortgage-purchase applications (seasonally adjusted)

Down 1% from a week earlier (as of week ending Oct. 27)

Down 22% to its lowest level in nearly 30 years

Mortgage Bankers Association

Redfin Homebuyer Demand Index (seasonally adjusted)

Down 6% from a month earlier (as of the week ending Oct. 29)

Down 1%

Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents

Google searches for “home for sale”

Down 6% from a month earlier (as of Oct. 28)

Down 12%

Google Trends

Touring activity

Down 16% from the start of the year

At this time last year, it was down 27% from the start of 2022

ShowingTime, a home touring technology company

Key housing-market data

U.S. highlights: Four weeks ending October 29, 2023
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 October 29, 2023

Year-over-year change

Notes

Median sale price

$369,613

3.4%

Prices are up partly because elevated mortgage rates were hampering prices during this time last year

Median asking price

$383,200

5.4%

Biggest increase in a year

Median monthly mortgage payment

$2,757 at a 7.76% mortgage rate

12%

$16 shy of all-time high set a week earlier

Pending sales

68,693

-8.8%

New listings

79,906

1.1%

Second year-over-year increase since July 2022; the first was a week earlier. The increase is partly because new listings were falling at this time last year.

Active listings

858,570

-10.2%

Smallest decline since July

Months of supply

3.7 months

+0.3 pts.

Highest level since February

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

37.7%

Up from 34%

Median days on market

33

-2 days

Share of homes sold above list price

29.4%

Up from 28%

Share of homes with a price drop

6.9%

+0.2 pts.

Record high

Average sale-to-list price ratio

99.1%

+0.4 pts.

Metro-level highlights: Four weeks ending October 29, 2023
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

Newark, NJ (14.8%)

San Jose, CA (13.6)

Anaheim, CA (11.5%)

West Palm Beach, FL (10.6%)

Columbus, OH (10.3%)

Austin, TX (-6%)

Fort Worth, TX (-3%)

Tampa, FL (-1.8%)

Portland, OR (-1.2%)

San Antonio, TX (-1.1%)

Declined in 5 metros

Pending sales

Austin, TX (2%)

Tampa, FL (1.3%)

Las Vegas (0.2%)

Portland, OR (-23.5%)

Sacramento, CA (-21.6%)

San Antonio, TX (-21.6%)

Seattle (-18.1%)

Newark, NJ (-16.4%)

Declined in all but 3 metros

New listings

Phoenix (13.9%)

San Jose, CA (12.7%)

Miami (12.1%)

Tampa, FL (10.7%)

West Palm Beach, FL (10.6%)

Atlanta (-22.5%)

Portland, OR (-14.7%)

Seattle (-12%)

Nashville, TN (-10.2%)

San Antonio, TX (-9.8%)

Increased in 16 metros

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-price-drops-record-high

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 sell homes for more money and charge half the fee. We also run the country's #1 real estate brokerage site. 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 in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

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 [email protected]. To view Redfin's press center, click here.

Redfin Journalist Services:

Kenneth Applewhaite, 206-588-6863

[email protected]

Source: Redfin

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