- The US housing market is starting to shine some sunshine on potential homebuyers.
- Altus Research said the stock was growing at a time of year that typically saw declines.
- Redfin reported that more home sellers are lowering their asking prices.
A glimmer of hope is beginning to emerge for U.S. homebuyers, who have been largely pushed out of the market amid rising prices and a widespread supply crunch.
This comes at a time when the housing market has been stuck, with sales activity halting as rising interest rates discourage buying and selling. In fact, the situation is so bad that Redfin CEO Glenn Kellman recently declared that the market has hit “rock bottom.”
But some indicators may be cause for some optimism.
Homebuilding has continued to be oversupplied, causing the nation’s housing stock to continue to grow during a season of historic declines. Inventory increased by 1.8% in the last week of September compared to the previous week. Altus Research he said, while cautioning that there was no sign of a flood on the upcoming stock.
“It’s late in the summer, so the volume of new listings typically declines, and the last few sales have ended in the peak summer months,” the real estate data company wrote. “So the fact that inventory grew nearly 2% this week and last week speaks volumes about how homebuyers are reacting to the highest mortgage rates in more than two decades.”
More precisely, 30 year mortgage rate The index reached its highest level in 23 years, rising more than 7%. The rise in borrowing costs has been a major factor in keeping supply low, as homeowners who financed at much lower interest rates are reluctant to give it up by exiting.
High rates and rising prices have also contributed to deteriorating home affordability. But there are also signs that prices may be heading lower.
More homes on the market have reduced their prices from their original list price, bringing the final share to 37%, which is more than a normal balanced market would see, Altus said.
Meanwhile, a separate report from Redfin also said that more home sellers are lowering their asking prices. During the four weeks ending September 24 6.5% of homes for sale in the United States saw their prices decrease Up from 5.8% in August.
“It is still difficult to win a home for less than the asking price, but sellers have come to terms with the fact that mortgage rates above 7% give buyers hesitation and that homes are unlikely to attract multiple offers,” Redfin said.
In today’s local market, sellers are open to negotiating the asking price, or making concessions, such as financing home repairs or a buyout mortgage rate.
At the same time, builders are also adapting to market conditions, offering smaller properties or price reductions as well.
Going into the fourth quarter, sellers may have to become open to further rate cuts, as expectations of a Fed rate hike may only send mortgage rates higher.
“The sentiment among buyers now is: For the interest rate I’m paying, this house better be exactly what I want or the price better be negotiable,” Redfin agent David Palmer said in the company’s report.
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