As the housing market cools, home sellers are beginning to get nervous and drop their prices. In August, new data from Realtor.com shows that one in five sellers dropped their asking prices. One year ago, that number was just 11%.
According to a report by Redfin, during the four week period ending August 28th, the average home sold for less than its listing price for the first time in 17 months.
It represents the fact that homes are not selling as effortlessly and fast as they were a year prior, when high demand hit tight supply, bidding wars ensued, and sellers could close on signed contracts in one weekend. In august, homes remained on the market an average of five days longer than they normally would have. That was the first annual increase in time on the market registered in more than two years.
Supply is also building fast as buyers pull back, up 27% from one year prior, even as fewer sellers are deciding to list. Pending sales in July were 20% lower than a year prior, according to data from the National Association of Realtors.
Danielle Hale, chief economist at Realtor.com said, “For many of today’s buyers, the uptick in for-sale home options is taking away the sense of urgency that they felt during the past two years, when inventory was scarce. As a result of this shift, coupled with higher mortgage rates, competition continued to cool in August, with listing price trends indicating that home shoppers are tightening their purse strings.”
Since January, mortgage rates have been increasing steadily, hitting a high in June, only to fall back slightly in July and most of August. They have since begun rising again however, and are bordering on touching their June high.
Refin reports that home tour requests and other services from its agents for homebuyers were down at the end of August 16% from the previous year. And according to home tour technology company ShowingTime, tours were also down 9% from the beginning of the year, compared with an 11% increase the previous year.
Daryl Fairweather, Redfin’s chief economist noted, “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.”
