According to a new Redfin study, the average U.S. home that sold in the four weeks ending June 23 went for 0.3% less than what was asked for. Since the start of the epidemic in 2020, when the housing market all but collapsed, this is the first year that the average home has sold for less than list price during this time of year. A year ago, the average home sold for exactly what was listed, and two years ago, it sold for about 2% more than what was listed.
Further, during that time, little under two-thirds (32.3%) of American homes sold for more than their asking price. That percentage is down from 36% a year ago and is the lowest for any June since 2020. Average asking prices were lowered by over 7% of home sellers, which is higher than it has been since November 2022 and higher than 4.7% a year earlier.
There is more supply than demand, at least for some types of homes in some areas of the country, which increases the possibility that homes will sell for less than the asking price. Nationwide, the number of new listings is up 8.2% year-over-year, but pending home sales are down 4.3%, the most in the last four months. The majority of inventory is becoming stale; as more than 60% of homes remain on the market for more than a month without selling.
Homebuyers Remain On the Sidelines
Buyers are shying away due to sky-high housing costs. The median home-sale price is up 4.9% year over year to an all-time high of $397,250. While mortgage rates have come down from May’s six-month high, the weekly average is still near 7%. The typical homebuyer’s monthly payment is $2,785, just about $50 below the record high.
Record-breaking heat is another reason some buyers have taken a backseat recently. “I’ve heard some clients say, ‘it’s so hot outside I don’t want to see anything,’” said Joe Hunt, a Redfin Manager in Phoenix. “But if mortgage rates were lower, I doubt heat would be keeping buyers away.”
Buyers may get a slight respite soon on costs soon. The growing likelihood that homes sell below asking price, along with the high share of sellers dropping their prices, could mean sale-price growth loses momentum. Plus, mortgage rates may decrease further if inflation continues to cool.
Redfin agents say both buyers and sellers should be realistic about prices in today’s market. Sellers shouldn’t overprice, and buyers should know they may be able to negotiate—but only if a home has been on the market without much activity for at least a few weeks.
“Some buyers think they can get a deal because they’re hearing the market is cool, and some sellers think every home will sell for top dollar no matter the condition,” said Marije Kruythoff, a Los Angeles Redfin Premier agent. “In reality, everything depends on the house and the location. The hottest properties in this area are either move-in ready or complete fixer-uppers. The homes in between, those that are pretty nice but not updated, are sitting on the market longest. Sellers of that type of home often benefit from making cosmetic repairs before listing, which we offer through Redfin Concierge Service. And buyers who do encounter middle-of-the-road listings without much wow factor should consider trying to negotiate.”
To read the full report, including more data, charts, and methodology, click here.
