According to data from real estate brokerage firm Redfin, as of June 23rd, over the past four weeks, the typical home sold for slightly below its list price for the first time since the onset of the COVID-19 pandemic, averaging 0.3% below asking prices. Previously, homes typically sold for about 2% above list price two years ago.
However, this does not suggest a market downturn. While less than two-thirds of homes sold last month went for more than their asking price, this proportion marked the lowest level since June 2020. Although most sellers continue to price their homes higher than comparable homes a year ago, some acknowledge they are no longer in complete control of pricing.
Mortgage rates remain relatively high, with the average rate for a 30-year fixed mortgage staying above 7% for three consecutive months.
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The closely watched S&P Case-Shiller index showed a 6.3% increase in home prices in April, with prices continuing to rise in May, continuing the trend. Home prices have now risen 47% since early 2020, with the median home sales price reaching five times the median household income.
Another index from the ICE Mortgage Technology, anticipated to be released next week, indicates that the annual home price growth rate decreased from 5.3% in April to 4.6% in May, the slowest increase in the past seven months.
Supply is beginning to increase, contributing to a cooling in home prices. Data from Realtor.com shows that the total number of active listings is now 35% higher than a year ago. Despite this increase in supply, housing inventory remains more than 30% below typical pre-pandemic levels.
Marije Kruythoff, a Redfin agent in Los Angeles, commented in a press release, "Some buyers feel they can negotiate deals as they sense the market cooling off. Meanwhile, some sellers still expect every home to sell for top dollar. In reality, the dynamics of the real estate market depend on specific homes and locations."
These data and observations indicate that the real estate market is undergoing a complex adjustment phase, with expectations and strategies of both buyers and sellers gradually adapting to changing market conditions.
