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Home Sellers Drop Prices Amid Rising Affordability Issues

Affordability issues are officially taking a toll on the market as the average asking price of a newly listed home is off 1.5% from its peak in spring in light of the rapid rate increase by the Federal Reserve in June. 

This is amid new data from Redfin [1] that showed a record amount of existing sellers had to drop their asking price in order to stay competitive during the four-week period ending June 26. 

Pending sales also continue to fall, posting their largest declines since May 2020, at the height of the pandemic, yet there are signs that early-stage homebuyer demand is starting to level off. 

“Data on home-tours, offers and mortgage purchase applications suggest that homebuyers have noticed the shift in power and are no longer leaving the market in droves,” said Daryl Fairweather [2], Redfin’s Chief Economist. “Buyers coming back will provide support to the housing market, but between now and the end of year I think the power will continue to shift towards buyers, resulting in mild price declines from month to month.” 

“Homebuyers are worried about interest rates, having to go back to the office, getting laid off, and wondering if they can get a better deal by waiting out the market,” said Caroline Loudenback [3], a Redfin Seattle-area real estate agent. “On the other side, sellers are adjusting to this new reality and learning that sometimes there’s not much they can do to increase buyer interest. Sometimes price isn’t even the reason a home is sitting on the market without selling—some more remote areas that were super popular during the pandemic are now being overlooked as buyers reconsider long commutes with high gas prices. It’s a tricky market and you have to pay close attention to your local sales and listings to understand what’s happening.” 

Leading indicators of homebuying activity:  

Key housing market takeaways for the top 400+ metropolitan areas:  

Unless otherwise noted, this data covers the four-week period ending June 26. Redfin’s weekly housing market data goes back through 2015.  

To view the full report, including charts and methodology, click here [4].