Real Estate Market Shift: Majority of U.S. Homes Selling Below Asking Price

What's Happening?

The U.S. housing market is experiencing a significant shift, with more than half of homes sold in May going for less than their asking price. According to real estate analytics firm Cotality, 56% of deals closed below the listed price, with the typical sale $45,000 under list. This trend marks a tilt towards a buyers' market, offering opportunities for price negotiations, closing cost assistance, and mortgage rate buydowns. Despite this shift, affordability remains a challenge, as buyers need approximately $200,000 more than a decade ago to purchase a median-priced home. The market has seen a 15% drop in sales from last year, with the median list price holding at $495,000 and mortgage rates near 7%. Inventory is rising, with homes lingering on the market for an average of 58 days, a week longer than last year.

Why It's Important?

The cooling housing market presents both opportunities and challenges. Buyers gain negotiating power, potentially leading to more favorable purchase conditions. However, systemic hurdles like high interest rates and insurance costs continue to impede homeownership for many. The shift could impact real estate businesses, mortgage lenders, and homebuilders, as they adapt to changing buyer dynamics. Regions with significant inventory increases, such as Toledo, Ohio, and Savannah, Georgia, may experience more pronounced market adjustments. Sellers holding onto pandemic-era pricing expectations may face prolonged listing periods, affecting their financial planning and market strategies.

What's Next?

As the market continues to cool, buyers may have more options and less pressure to rush into deals. Sellers might need to adjust their expectations and consider more competitive pricing strategies. Real estate professionals and policymakers may focus on addressing affordability issues to facilitate homeownership. The ongoing inventory rise could lead to further price adjustments, influencing regional market trends. Monitoring interest rates and economic conditions will be crucial for stakeholders to navigate the evolving housing landscape.