The average home sold for less than 100 percent of the asking price for the first time in 17 months in August, according to a Redfin report.
According to the report, the average home sold for above the final asking price, after all price drops, every month since March 2021. The change came as the share of listings with price drops have begun to plateau.
Despite price reductions, demand for mortgage purchase options and pending sales has seen a large year-over-year decline from 2021, as mortgage rates remain high amidst rising rates from the Federal Reserve. The average mortgage rate for August was 5.66 percent, the highest level since June. New listings and total inventory have also seen a decline as homeowners are becoming more reluctant to enter the market.
Redfin found that fewer people searched for “homes for sale” on Google with searches during the week ending Aug. 27 down 26 percent from a year earlier.
“While the cooldown appears to be tapering off, there are signs that there is more room for the market to ease,” Redfin Chief Economist Daryl Fairweather said. “The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight. Expect homes to linger on the market, which may lead to another small uptick in the share of sellers lowering their prices.”
Fairweather added that homebuyers’ budgets are becoming increasingly stretched thin by rising costs from ongoing inflation.