The housing market is grappling with significant challenges as high mortgage rates dampen buyer demand, leading to a marked increase in price drops and a cooling in sale-price growth. In the four weeks ending May 26, 6.4% of home sellers nationwide reduced their asking prices, the highest rate of cuts in 18 months. The median asking price saw a $3,000 decline, reaching $416,623—the first drop in six months. This trend is coupled with a rise in the age of inventory, now averaging 46 days on the market, indicating that homes are taking longer to sell.
Despite these price adjustments, the median home sale price is still up 4.3% year over year, hitting record highs. However, this is likely a lagging indicator, as sale prices reflect deals negotiated at least a month prior. Buyers are experiencing some relief with a slight dip in the typical monthly housing payment to $2,812, the lowest in six weeks, thanks to mortgage rates dropping below 7% for the first time since early April. Yet, this reprieve may be short-lived as mortgage rates are expected to rise again following disappointing treasury auctions.
The cooling demand is evident in the 3.4% year-over-year decline in pending sales and mortgage-purchase applications reaching a six-month low. Additionally, the supply of new listings is dwindling, with listing growth losing momentum, leaving fewer homes for buyers to choose from in May. This is reflected in the significant 7.7% decrease in pending home sales in April, with contract signings down in all regions compared to both the previous month and the previous year.
In a striking example of the market’s volatility, Sonja Morgan, a star of “The Real Housewives of New York City,” sold her Upper East Side townhouse at a significant loss. Originally purchased for $9.1 million in 1998, the property sold at an online auction for just $4.45 million. Including the buyer’s premium, the final sale price was $4.98 million. This sale, after years of price cuts and lack of buyers, underscores the financial strain and challenges even high-profile sellers face in the current market.
These developments point to a housing market in flux, where high costs and interest rates are suppressing buyer activity, and inventory issues compound the problem.
Sources:
https://www.redfin.com/news/housing-market-update-sellers-drop-asking-prices/
https://www.globenewswire.com/news-release/2024/05/30/2890884/0/en/Pending-Home-Sales-Slumped-7-7-in-April.html
https://nypost.com/2024/05/29/real-estate/sonja-morgan-has-sold-her-nyc-home-at-auction-for-4-45m/
REDFIN: “.. Nationwide, 6.4% of home sellers cut their asking price during the four weeks ending May 26, on average, the highest share since November 2022.” pic.twitter.com/r2K7ERQ7iN
— Win Smart, CFA (@WinfieldSmart) May 31, 2024