Downtrends are accelerating in home buyers’ markets as Redfin announced last week that competition for homes had fallen to its lowest level in 15 months and the highest share of sellers on record had lowered its list prices in the four weeks ending June 12.
It highlighted a week that saw mortgage interest rates rise to levels not seen since 2008.
Jennifer Bowers, a Redfin realtor in Nashville, said in prepared remarks that homes are now getting one to three offers, up from five to 10 two months ago and up to 25 to 30 six months ago.
“The offers are also not as high as they used to be compared to the list price,” Bowers said.
Redfin deputy chief economist Taylor Marr said in prepared remarks: “The housing market is not crashing, but it is experiencing a hangover as it descends from an unsustainable high.
“The demand for housing has already cooled considerably to the point that the industry has started to face layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be unaffordable. With many home sellers already lowering prices, more homeowners are likely to decide to stay put now that the mortgage rate on a new home is significantly higher than what they are currently experiencing.
In terms of competition, townhouses were more likely than any other property type to face competition, followed by single-family homes, multi-family properties and condos/co-ops.
Highest one-week mortgage rate spike since 1987
Meanwhile, buying a home has never been so expensive.
For the week ending June 16, 30-year mortgage rates hit 5.78%, the highest level since November 2008 and the biggest one-week increase since 1987.
The 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.
“Those that remain in the market may notice that they face less competition from other buyers,” Redfin reported. “Homes are more likely to stay on the market for a few weeks, compared to last year when they would go under contract within a week, and home prices are rising less frequently than they were earlier in the spring. .”