According to a report from real estate brokerage Redfin, new listings of homes for sale have increased by 2% since the beginning of September. This shift deviates from the traditional reduction in listings seen from summer to fall.
Despite enjoying low mortgage rates, some homeowners are taking the plunge and listing their homes. While the total number of homes available for sale is 14% lower than the previous year, during the four weeks ending Oct. 8, this marks the smallest decline since July.
Sellers are advised to capitalize on the still-ascending prices, with the median sale price experiencing a 3% hike year over year amidst subdued demand. However, with increased instances of price drops and the high mortgage rates impacting buyers’ spending power, sellers should focus on setting a competitive price.
On the buyers' front, many are exercising caution. The confluence of mortgage rates reaching a two-decade high and the median U.S. monthly mortgage payment nearing $3,000 has caused a retreat. Although mortgage-purchase applications have slightly risen, they hover around their lowest point in almost 30 years.
However, prospective buyers should not lose all hope. Despite the anticipation of persistently high mortgage rates, opportunities might arise during short periods of relief. The recent increase in new listings and a slight reduction in daily average rates from last week’s peak offers a window of opportunity.
“Despite last week’s hotter-than-expected jobs report, rates have fallen after the Fed signaled this week that it is unlikely to hike interest rates again and war broke out in Israel,” said Redfin Economic Research Lead Chen Zhao. “Buyers should also remember that the average mortgage rate in the news is just that: an average. Many buyers can secure a lower rate by shopping around; the difference between rates among lenders is bigger when rates are higher. Buying down a mortgage rate is always an option, too.”
Buyers are encouraged to remember that the average mortgage rate reported in the news is a median figure. By exploring options and comparing offers from various lenders, many buyers might secure lower rates; a benefit accentuated when overall rates are high. The option to buy down a mortgage rate also remains a viable strategy.
According to Zillow, home values took a short step backward from August to September, falling 0.1%. That's less pronounced than the 0.8% monthly decline seen in September 2022, but a step backward is still unusual for this time of year. Between 2015 and 2019, monthly growth in September hovered between 0.1% and 0.4%.
The typical home value now stands at $350,091 nationally, up roughly 2% from last year. Of the 50 largest major metropolitan areas, 31 have home values higher than a year ago.
Zillow says there was less availability this September than in previous years.
Zillow found new listings decreased by nearly 18% compared to 2019, showing progress from the 20% deficit in August and 27% in July.
While new listings dropped approximately 6% from August to September, this decline was modest compared to the 13% average decrease seen in 2018 and 2019.
Although there was a slight 0.2% uptick in total listings for sale in September from August, inventory remains scarce for buyers. Current listings are 10% less than last year and a substantial 41% below 2019 levels.
As the housing market continues to balance the scales between seller’s aspirations and buyer’s affordability, the nuanced dance between listing prices, mortgage rates, and available inventory will shape the real estate landscape in the coming months.
