Home Prices Fall 8.4% From All Time Highs, Is There More Relief Coming?
Redfin Corp (NASDAQ: RDFN) data shows that the annual growth in sales prices for properties sold during the four weeks that ended on November 13 was 3.2%, the smallest increase since July 2020.
However, since reaching all-time highs in June, the median price of homes sold has dropped substantially by 8.4%, ebbing along with the 30-year fixed, which fell sharply last week on better-than-expected inflation statistics released by the U.S. Bureau of Labor Statistics.
“The inflation news is already helping to bring daily mortgage rates down,” said Redfin Deputy Chief Economist Taylor Marr. “However, Chair Powell has indicated that inflation would need to slow for several consecutive months before the Fed would lower its target for how high it raises rates next year.”
Early-stage demand might be tapering off just as serious homebuyers who are in the market right now get used to mortgage rates of around 7% and get better at negotiating with sellers over price and terms.
After declining for six weeks, mortgage purchase applications started to rise last week. The week ending November 6 saw an increase of 2.8% in Redfin's Homebuyer Demand Index, which tracks requests for home tours and other services from Redfin agents.
Is it time to buy? Redfin’s economist suggested that still soaring home prices are propping up inflation, but mentioned that the Fed’s data is backward-looking, and the pricing landscape for those in the market right now may not reflect the data above.
“The buyers who remain in this market are likely getting much better deals than the median asking or sale price reflects,” Marr said. “The typical home now sells for less than asking, price drops remain at a record high and seller concessions are becoming increasingly common.”
To read about the latest developments in the industry, check out Benzinga's real estate home page.
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