Mortgage Rates Have Nearly Doubled in the Last Year—Here’s What That Means for Homebuyers

In June 2022, 163 Austin homes sold for at least $100,000 above their asking price, and just one month later, that share dropped to 53, according to Redfin. Cooling market conditions aren’t exclusive to the Texas capital, but instead are becoming more prevalent everywhere as higher mortgage rates continue to cool red-hot buyer demand.

U.S. home-sale prices and asking prices are both down 6% after reaching record highs in June, and for the first time since March 2021, the typical U.S. home sold below its asking price in August. After two years of an ultra-competitive seller’s market, home sellers are now losing their leverage and buyers are regaining negotiating power.

“Today’s buyers are negotiating, and they expect sellers to work with them,” said Bend, OR Redfin agent Angelica Webb. “If a buyer offers $35,000 below asking price and the seller counters with a $10,000 reduction, the buyer may walk away from the deal. If they ask for a repair after the inspection and the seller refuses, they may walk away. Three months ago, a buyer would have been very unlikely to make an offer under asking price or back out after an inspection. But now that there are more homes for sale and fewer buyers, they can just look at similar properties with recent price reductions or make an offer to a seller who is willing to negotiate.”

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