Homes Are Finally Selling Below List Price Again
The typical home is selling for less than its list price, which hasn’t been the case the last three summers.
Homes sold for 0.3% less than the asking price over the four-week period ending June 23, according to a new report from Redfin.
An increase in the supply of homes and sluggish sales are favoring buyers. The number of active listings has increased 16.9% in the past year to 955,300, while the number of pending home sales is down 4.3%.
These market conditions are giving buyers the leverage to buy homes at reduced prices for the first time since early in the pandemic.
“The likelihood of homes selling below asking price is rising because there’s more supply than demand, at least for certain types of homes in certain parts of the country,” Redfin said in the report.
Overpricing may also play a role, as sellers could be pushing the market as far it can go. The median asking price of $414,975 is about $19,000 higher compared to last summer.
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Homes are selling below list price again
This isn’t the only time that homes have sold under list price in recent years, but it’s the first time it’s happened in June when the housing market is usually hot.
For comparison, homes sold for about 2% above list price during this period in 2021 and 2022, according to Redfin. Last June, they sold for exactly the list price. (Redfin calculates the difference using the average ratio of a particular home’s sale prices to its list price.)
Only 32.3% of homes sold for more than the list price over the recent four-week period, which was the lowest amount since spring 2020 “when the housing market had nearly ground to a halt with the onset of the pandemic,” according to the report.
More home sellers have also been cutting their list prices in recent weeks. The share of homes with a price drop is up to 6.7%, which compares to 4.7% this time last year.
Unfortunately for home buyers, however, affordability has yet to improve. Asking prices are up more than 6% year over year, and prospective homebuyers are still dealing with high mortgage rates — currently just under 7%, according to Freddie Mac.
The typical home is selling for a record high of $397,250, and the typical monthly mortgage payment is $2,785, which is only $50 less than the record.
Conditions may improve as the year goes on: “Buyers may get a slight respite soon on costs soon,” Redfin said in the report. “The growing likelihood that homes sell below asking price, along with the high share of sellers dropping their prices, could mean sale-price growth loses momentum.”
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