Median U.S. home asking price falls for the first time since March as mortgage rates remain high.
Source: Original report
The U.S. housing market showed signs of cooling this week, with asking prices declining for the first time since March. This shift comes as mortgage rates remain elevated and homebuying demand stays near record lows.
Home Prices Lose Momentum
According to the latest data, the median U.S. home-sale price increased just 0.5% year over year, marking the slowest growth rate since March. More notably, the median asking price fell 0.3% year over year, the first decline since March. This indicates that some relief may be on the horizon for buyers who have faced steep prices and high mortgage rates.
Mortgage Rates Impact Affordability
The average mortgage rate reached a 3-year high of 7.4% on October 8, although it has since eased slightly to 7.45% as of October 14. Despite this minor improvement, the typical homebuyer's monthly payment remains at a record high of $2,777, driven by both high mortgage rates and still-increasing home prices.
Homebuying Demand Near Record Low
Pending home sales saw a modest uptick of 1.5% from the previous week, possibly due to the slight easing of mortgage rates. However, overall demand remains near its lowest level since records began in 2021. This trend is consistent across all 50 of the most populous U.S. metro areas, where pending sales declined year over year.
Price Drops at Record High
As sellers adjust to the slowing price momentum, more are opting to cut their asking prices. Currently, 22% of home sellers with active listings have reduced their prices, up from 20.9% a year earlier. This is the highest level recorded, suggesting that sellers are becoming more flexible in response to market conditions.
Housing Supply Grows Slowly
While housing supply is growing, the pace is gradual. New listings of homes for sale increased by 0.4% week over week, and the total number of homes for sale rose by 0.8%. This slow growth in supply may not be enough to significantly impact the market dynamics in the short term.
For a deeper analysis, visit Redfin’s From Our Economists page.
