Home buying has never been more expensive, according to a new report from Redfin. But home sellers are adjusting.
The highest share of sellers on record dropped their list price during the four weeks ending June 12 as mortgage rates shot up to rates that put 2008’s to shame.
On average, 5.6% of homes for sale each week had a price drop, a record high as far back as the data goes, through the beginning of 2015. Looking at this data from a month-long perspective, 22.4% of homes had a price drop.
Redfin says that a 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. 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.
Steadfast homebuyers may notice that there is less competition in comparison to last year where houses would go under contract within one week. Additionally, less house bids are occurring than they were earlier in the spring.
“If it weren't for the surge in mortgage rates, the housing market would still be in a boom right now,” said Redfin Bay Area real estate agent James Cappello. “Demand from homebuyers was still extremely high as recently as February, but rates are making it really tough. Going from 3% to nearly 6% almost instantly has scared a lot of people out of the market.”
Other takeaways:
- The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—continued to decline 14% in the week ending June 12, marking the ninth consecutive week of declines in the index.
- Mortgage purchase applications were down 16% from a year earlier, while the seasonally-adjusted index was up 8% week over week during the week ending June 10.
- The median asking price of newly listed homes increased 16% year over year to $409,251, according to data from a 4-week period ending June 12.
