Downward trends are accelerating in home-buyer markets as Redfin announced last week that competition for homes fell to a 15-month low and the highest share of sellers on record dropped their list prices during the four weeks ending June 12.
This highlighted a week that saw the home mortgage interest rates bolt higher to levels not seen since 2008.
Jennifer Bowers, a Redfin real estate agent in Nashville, said in prepared remarks that homes are now getting one to three offers, compared with five to 10 two months ago and as many as 25 to 30 six months ago.
“Offers also aren’t coming in as high above the list price as before,” Bowers said.
“The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” Redfin deputy chief economist Taylor Marr said in prepared remarks. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out. While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one.”
Competitively speaking, townhouses were more likely than any other property type to encounter competition followed by single-family homes, multifamily properties and condos/co-ops.
Mortgage Rate Spike Highest In Week Since 1987
Meanwhile, home buying has never been more expensive.
For the week ending June 16, 30-year mortgage rates rose to 5.78%—the highest level since November 2008, and the largest one-week increase since 1987. The typical buyer with a 30-year fixed-rate mortgage is looking at a monthly payment of $2,514, up from $1,692 a year ago.
“Those who remain in the market may notice they face less competition from other buyers,” Redfin reported. “Homes are more likely to sit on the market for a few weeks, compared to last year when they would go under contract within a week, and home prices are being bid up less often than they were earlier in the spring.”