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The average home sold for less than its listing price for the first time in more than 17 months — since the spring of 2021 — as the housing market cooldown continued with no end in sight, according to a new report.
The average list-to-sale ratio clocked in under 100 percent for the first time since March 2021 in August, as buyers continue to see their budgets stretched by high mortgage rates and sellers do their best to price their homes attractively, according to a report released Thursday by Redfin.
“While the cooldown appears to be tapering off, there are signs that there is more room for the market to ease,” Redfin Chief Economist Daryl Fairweather said in a statement.
“The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight,” Fairweather added. “Expect homes to linger on the market, which may lead to another small uptick in the share of sellers lowering their prices. Homebuyers’ budgets are increasingly stretched thin by rising rates and ongoing inflation, so sellers need to make their homes and their prices attractive to get buyers’ attention during this busy time of year.”
Some sellers are responding to buyer reluctance by dropping their asking prices, while some respond by waiting to list their homes at all.
The number of new listings has dropped for two months straight while the number of active listings remain 43.8 percent below historical averages before the pandemic, according to data from Realtor.com. Total inventory of homes for sale have also charted large declines, according to Redfin.
The week ending Sept. 1 saw mortgage rates rise to 5.66 percent, down from a yearly high of 5.81 percent but up significantly from where they started the year at 3.22 percent. Mortgage purchase applications were down 2 percent week over week and 23 percent year over year compared to the week ending August 26, according to Redfin data.
Redfin’s Homebuyer Demand Index — a measure of homebuyer demand that takes touring activity and other homebuying requests from Redfin agents into account — was up 15 percent from its 2022 low point, but down 16 percent year over year according to a news release.