Asking prices drop as rate hikes slow market activity

"Sellers are adjusting to this new reality," says one Redfin agent

Asking prices drop as rate hikes slow market activity

A record-high share of homes sellers dropped their asking prices in June to adjust to a market slowed by surging mortgage rates and affordability concerns, according to a new report by online brokerage Redfin.

During the four-week period ending June 26, the median asking price of newly listed homes was $405,547, down 1.5% from the all-time high recorded in the previous month. Pending home sales also slid down 13% year over year, posting the largest decline since May 2020.

Additionally, new listings of homes for sale were down 7% compared to the previous year, while active listings saw their smallest decline since March 2020, falling 8% year over year.

“Data on home-tours, offers and mortgage purchase applications suggest that homebuyers have noticed the shift in power and are no longer leaving the market in droves,” said Redfin chief economist Daryl Fairweather. “Buyers coming back will provide support to the housing market, but between now and the end of year I think the power will continue to shift towards buyers, resulting in mild price declines from month to month.”

According to Redfin’s seasonally adjusted Homebuyer Demand Index, requests for home tours and other home-buying services went down 15% year over year during the week ending June 26, but were up seven points from the week prior.

“Homebuyers are worried about interest rates, having to go back to the office, getting laid off, and wondering if they can get a better deal by waiting out the market,” said Caroline Loudenback, a Redfin real estate agent in the Seattle area. “On the other side, sellers are adjusting to this new reality and learning that sometimes there’s not much they can do to increase buyer interest. Sometimes price isn’t even the reason a home is sitting on the market without selling—some more remote areas that were super popular during the pandemic are now being overlooked as buyers reconsider long commutes with high gas prices. It’s a tricky market and you have to pay close attention to your local sales and listings to understand what’s happening.”