The average home sold for less than its list price for the first time in over 17 months during the four-week period ending August 28, as the housing market cooldown continued, according to a new report from Redfin.
Every month since March 2021 has seen an average sale-to-list ratio of over 100%, meaning that the average home has sold for more than its final asking price, after all price drops. This comes as the share of listings with a price drop has finally begun to plateau.
Despite the easing in home prices, demand from homebuyers is still chilled – mortgage purchase applications and pending sales both saw large declines from a year ago – thanks in large part to another spike in mortgage rates, which rose to 5.66%, their highest level since June. Home sellers are also reluctant to step into the market: new listings and total inventory of homes for sale saw large declines as well.
“While the cooldown appears to be tapering off, there are signs that there is more room for the market to ease,” observes Daryl Fairweather, Redfin’s chief economist. “The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight. 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.”
For the week ending August 25, 30-year mortgage rates rose to 5.66%. That’s down from a 2022 high of 5.81% but up from 3.22% at the start of the year.
Fewer people searched for “homes for sale” on Google. Searches during the week ending August 27 were down 26% from a year earlier.
The seasonally adjusted Redfin Homebuyer Demand Index – a measure of requests for home tours and other home-buying services from Redfin agents – was up 15% from the 2022 low in June during the week ending August 28, but was down 16% year over year.
Touring activity as of August 28 was down 9% from the start of the year, compared to a 11% increase at the same time last year, according to home tour technology company ShowingTime.
Mortgage purchase applications were down 2% week over week, seasonally adjusted, and were down 23% from a year earlier during the week ending August 26.
Unless otherwise noted, this data covers the four-week period ending August 28. Redfin’s weekly housing market data goes back through 2015. The median home sale price was $370,000, up 6% year over year. Prices have declined 6% from the record high of $393,725 hit during the four-week period ending June 19. A year ago, they rose 0.4% during the same period.
Three metro areas saw a year-over-year decline in their median home-sale price: Honolulu, Hawaii, where prices fell 3.6% to $676,875, Oakland, Calif., where prices fell 3% to $918,500, and San Francisco, Calif., where prices were down 3.7% to $1,453,125.
The median asking price of newly listed homes increased 9% year over year to $379,194. Asking prices are down 5.8% from the all-time high set during the four-week period ending May 22. Last year during the same period they were down just 0.4%.
The monthly mortgage payment on the median asking price home was $2,306 at the current 5.66% mortgage rate, up 39% from $1,665 a year earlier, when mortgage rates were 2.87%. That’s down from the peak of $2,461 reached during the four weeks ending June 12. Pending home sales were down 18% year over year.
New listings of homes for sale were down 16% from a year earlier, the largest decline since May 2020.
Active listings (the number of homes listed for sale at any point during the period) fell 0.9% from the prior four-week period. On a year-over-year basis, they rose 4.2%.
Of homes that went under contract, 35% had an accepted offer within the first two weeks on the market, little changed from the prior four-week period but down from 43% a year earlier. Twenty-four percent of homes that went under contract had an accepted offer within one week of hitting the market, little changed from the prior four-week period but down from 30% a year earlier.
Homes that sold were on the market for a median of 26 days, up from 21 days a year earlier and the record low of 17 days set in May and early June. Thirty-seven percent of homes sold above list price, down from 50% a year earlier. On average, 7.5% of homes for sale each week had a price drop, a record high but unchanged from the prior four-week period.
The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, fell to 99.8% from 101.4% a year earlier. In other words, the average home sold at its asking price. This was the first time since March 2021 the ratio has fallen below 100%, meaning the typical home is now selling for below asking price.
Read the full report here.