As U.S. home prices cool down from record-high mortgage rates, Zillow predicts the fall season to be a good time for potential homeowners to buy.
The American real-estate marketplace based its predictions on an analysis reporting a larger proportion of sellers are relenting on their asking prices, according to a Thursday report by senior economist Jeff Tucker.
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“The housing market always cools off gradually from midsummer until the holiday season, but this year that cooldown is accelerating at an unusual pace for early autumn,” the site reads. “That means the balance of negotiating power is swinging rapidly from sellers to buyers.”
According to the real estate company, 9.2 percent of home listings saw a price cut in the week ending September 16 – the highest share since November.
What's next for the housing market? @zillow Chief Economist @skylarolsen9 breaks down the homeowner's mindset on selling in the next few years. pic.twitter.com/b3l6IK9MJb
— CNBC's Fast Money (@CNBCFastMoney) September 28, 2023
“For determined buyers with enough budget room to accommodate the recent jump in mortgage rates, this fall is looking more and more like a sweet spot: There are more motivated sellers and more active listings overall than any time since last December, improving buyers’ chance to find the right fit,” Tucker wrote in the report.
High mortgage rates have stretched many buyers past potentially buying. The typical monthly mortgage for buyers reached $1,896 in August – 18 percent higher than the year prior. Payments have already risen 60 percent from the previous year. The monthly repayment for a mortgage including the principal and interest, has risen an insane 122 percent within the past three years.
What does this mean? According to Zillow, the share of homes that sold for more than their final list price has been gradually declining, from 41.9 percent of closed sales in the end of June, to 38.3 percent in the week ending August 12.
“We’re seeing houses being listed and sold relatively near their listing price,” said Chris Stroud, cofounder and chief of research for HouseCanary. “Cuts are coming down significantly, as sellers are reluctant to abandon low rates while also selling their home at a discount.”
The rising share of price cuts means a potential change of tides in the market, expecting fewer above-list-price sales in the weeks ahead.
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