The intense market competition of the last two pandemic-fueled years is finally beginning to slow down, according to a new report released Thursday by Seattle-based brokerage Redfin.
Nineteen percent of homesellers — or nearly one in five — dropped their listing price during the four-week period ending on May 22, 2022, marking the largest number of sellers to do so since pre-pandemic times in October 2019, Redfin reported.
During the four-week period ending May 1, just 15 percent of sellers dropped their asking price.
In addition, the typical listing’s time on market, the share of homes that have gone pending within one week, and the share of homes sold above-asking have all plateaued, another sign of the market cooling off. Mortgage purchase applications were also at the same rate as they were in June 2020 (down 16 percent year over year) and the number of buyers visiting and making offers on homes, according to the Redfin Homebuyer Demand Index, saw its largest annual decrease since April 2020, a decline of 12 percent year over year.
“The picture of a softening housing market is becoming more clear, especially to homesellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates,” Daryl Fairweather, chief economist at Redfin, said in a statement.
“For now, mortgage rates have stabilized, and I expect prices to do the same. This will remove some uncertainty for buyers. That means that as long as a home is priced conservatively, it still has a good chance of selling quickly.”
Google searches for “homes for sale” during the week ending May 21 were also down 13 percent year over year.
Meanwhile, the median home sale price was up 16 percent year over year during the four-week period ending May 22 to a record $400,000. The median asking price of new listings was up 18 percent year over year to $418,000, which was also a new high.
The monthly mortgage payment was $2,425 at the current mortgage rate of 5.1 percent, up 42 percent year over year from $1,708 when mortgage rates were 2.95 percent.
Pending home sales dropped 5.4 percent from the previous year and new listing were down 0.9 percent year over year.
Active listings, however, saw their smallest decline since April 2020, dropping 13 percent year over year during this period.
More than half of all homes that went under contract — 55 percent — had an offer accepted within the first two weeks of listing, up from 53 percent the year before. Forty percent of all homes that went under contract had an offer accepted within one week of being put on the market, about equal to the year before.
Homes on the market during this four-week period sold for a record-low median of 15 days, down from 19 days the previous year.
And despite sellers dropping their prices, a record 57 percent of homes still sold above list price, up from 50 percent the year before.
An average of 4.8 percent of homes for sale each week saw a price drop. Nineteen percent dropped their price in the last four weeks, up from 13 percent the previous month and up from 9.8 percent the previous year.
The average sale-to-list price ratio, or how close homes sell to their asking price, remained at an all-time record high of 102.8 percent, which means the average home sale for 2.8 percent above its list price. During the same period last year, the average sale-to-list price ratio was 101.6 percent.