As the Market Cools, the Average Home Is Selling Below Asking Price

During the four-week period ending August 28, the average home sold for less than its list price for the first time in over 17 months, but the share of homes with a price drop is beginning to plateau after reaching a record high during the previous four-week period, according to Redfin. Home prices may be easing, but homebuyer demand is still quelled by elevated mortgage rates, which recently rose to 5.66%, their highest level since June.

Mortgage purchase applications and pending sales are both down year-over-year, and a cooling market is also creating obstacles for home sellers, who are becoming increasingly reluctant to list their homes.

“While the cooldown appears to be tapering off, there are signs that there is more room for the market to ease,” said Redfin Chief Economist Daryl Fairweather. “The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight. Expect homes to linger on the market, which may lead to another small uptick in the share of sellers lowering their prices. Homebuyers’ budgets are increasingly stretched thin by rising rates and ongoing inflation, so sellers need to make their homes and their prices attractive to get buyers’ attention during this busy time of year.”

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