The housing market’s ongoing slowdown will continue through the end of the year as surging mortgage rates discourage prospective homebuyers, according to the latest analysis by real estate firm Redfin.
Redfin noted a “nosedive” in home-touring activity, which is down 38% since January over the last four weeks, with declining demand that led a near-record share of homeowners to lower their asking prices.
The average home sold for 0.3% less than their asking price for the four weeks ending September 4 – marking the first-time homes didn’t sell above their list price in a year and a half, according to the firm’s latest market report.
“The housing market always cools down this time of year, but this year, I expect fall and winter to be especially frigid as sales dry up more than usual,” Redfin Chief Economist Daryl Fairweather said.
“Thanks largely to mortgage rates near or even above 6%, potential homebuyers and sellers are focusing on the back-to-school season and enjoying the last days of summer rather than getting into an uncertain market,” Fairweather added.
The average 30-year fixed-rate mortgage was 5.89% this week, up from 5.66% the previous week, according to Freddie Mac. Mortgage rates have reached their highest levels since November of 2008 when the economy was in the throes of the subprime mortgage crisis.
New listings of homes for sale sank 18% year-over-year during the four weeks ending on September 4, according to RedFin. Over the same period, 35% of homes sold above their leasing price, compared to 49% in the same period one year ago.
The average sale-to-list price ratio, or the final cost of homes compared to their asking prices, sank to 99.7%, down from 101.2% year-over-year. In other words, the average home is selling below its list price.
The housing market has slowed from its red-hot pace during the COVID-19 pandemic as the Federal Reserve moves forward with interest rate hikes. The policy tightening has contributed to the mortgage rate surge that has hampered affordability for would-be homebuyers.
As The Post reported earlier this week, the median US home price declined 0.77% from June to July, according to a separate report by mortgage analytics firm Black Knight. That figure marked the largest month-over-month decline in home values since January 2011.