Redfin reported on Friday (11-3-23) that during the four-week period ending on October 29th, nearly 7% of homes for sale posted a price drop. According to Redfin, this is the highest portion on record.
The record comes as mortgage rates hover at elevated levels, hitting their highest level in 23 years last week and cutting deep into buyers’ budgets. High rates have forced some sellers to lower their asking price to make up for high interest rates on monthly payments, Redfin says. (It is worth noting that buyers are getting a bit of relief this week, at least temporarily: Economic events sent daily average mortgage rates down from 8% to 7.5% over the last week.)
On the other hand, Redfin reports that prices are 3% higher year-over-year. That’s partly because sale-price data are a lagging indicator, reflecting deals that went under contract a month or two ago. Growth in sale prices may slow in the coming months as it starts to reflect sales that went under contract as mortgage rates hit 8% in October.
Redfin noted another explanation for rising sale prices is that despite slow demand, low inventory is propping up prices. The total number of homes for sale is down 10% year-over-year; new listings are up 1% from a year ago—just the second increase since July 2022—but that is partly due to new listings falling quickly at this time last year. Price drops becoming more prevalent than ever while prices continue increasing illustrates today’s bizarre housing market, Redfin said.
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