For potential purchasers, the US housing market is beginning to show some signs of improvement.
According to Altos Research, inventory is increasing during a time of year when it typically drops.
Redfin also noted that an increasing number of house sellers are reducing their asking prices.
For US homebuyers, who have been mostly driven out of the market due to rising costs and a general shortage of supply, a glimmer of optimism is beginning to emerge.
As a result of high rates discouraging both buying and selling, the housing market has been stagnant for some time. The state of affairs is so dire that Redfin CEO Glenn Kelman recently announced that the market has reached “rock bottom.”
However, a few signs could give rise to some confidence.
The nation’s housing inventory has continued to increase as a result of ongoing home construction during a season when sales of housing typically drop. According to Altos Research, inventory increased 1.8% in the final week of September compared to the prior week, although the company issued a warning that there is no indication that an inventory flood is imminent.
The real estate data company noted, “It’s late summer, so typically new listing activity is falling, the last few sales of the high summer months are closing. In light of the highest mortgage rates in more than two decades, the fact that inventory increased by about 2% this week and last week is rather illuminating.
More specifically, the 30-year mortgage rate surpassed 7% and reached its highest point in 23 years. Because homeowners who obtained their mortgages at far cheaper rates are hesitant to give those up by selling, the rise in borrowing costs has been a significant role in maintaining a limited supply.
The affordability of homes has gotten worse due to high rates and growing costs. However, there are also hints that prices might be declining.
According to Altos, more homes on the market have reduced their asking price from when they first went on the market, bringing the most recent proportion to 37%, which is higher than what a usually balanced market would typically see.
Redfin also said in a different research that more house sellers are lowering their asking prices. 6.5% of US homes for sale had a price reduction over the four weeks that ended on September 24; this is an increase from the 5.8% in August.
Although it’s still challenging to get a home for less than the asking price, Redfin noted that sellers have accepted the reality that buyers are becoming hesitant due to mortgage rates of over 7% and that homes aren’t as likely to receive multiple offers.
Sellers of existing homes are becoming more amenable to haggling over the asking price or making concessions, such as paying for necessary house repairs or lowering the mortgage rate.
since we get into the fourth quarter, sellers might need to be willing to make more price cuts since rising mortgage rates are expected as a result of predictions of a future Federal Reserve interest rate hike.
Redfin realtor David Palmer stated in the company’s study that “the feeling for buyers right now is this: For the interest rate I’m paying, this home better be exactly what I want or the price better be negotiable.”