The tides are changing in the housing market, which has been solidly seller-friendly for the past couple of years. Now, homeowners are seeing a smaller window to cash in on market gains while prospective home buyers are already bowing out over heated prices and rising mortgage rates.
On Thursday, Redfin advised prospective sellers to list as soon as possible and price below recent comps, noting that sellers should expect to get less for their home than what a neighbor may have gotten even one month ago.
“We don’t expect prices to fall lower than they were a year ago, but price growth will likely slow as the year goes on,” Redfin Chief Economist Daryl Fairweather said in a news release. “Sellers should list their home as soon as they reasonably can.”
The urgency comes as mortgage applications have fallen to the lowest level since 2018, according to Mortgage Bankers Association. Mortgage applications dropped 2.3% from the previous week, according to a weekly survey.
MBA noted that even lower mortgage rates are not enticing home buyers back into the market. After spiking earlier this spring, fixed rates on a 30-year mortgage have actually gone down four of the last five weeks. The average buyer is still balking at the 5.33% rate, mixed with housing prices at all-time highs. But dampened demand is not across the board.
“Demand is high at the upper end of the market, and supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said.
There are signs of relief for first-timers as experts expect a sweet spot on the horizon. Redfin previously reported that nearly one in five sellers dropped their price toward the end of May, so while home prices are still breaking records, signs are starting to point to a softer summer for those still looking to buy.
