With years of home low inventory, prices soaring and lower than normal interest rates for many home buyers. New data is now showing that buyers might be regaining some leverage in the market.
Looking at recent home sales data a good portion of U.S. homes purchased during August majority sold for less than what sellers were asking. That hasn't happened since at least March 2021, according to the real estate brokerage Redfin.
“The only times you get homes going above list price is when there’s a bidding war, and those used to not be a regular occurrence,” said Daryl Fairweather, Redfin’s chief economist. “And we’re back to a place where bidding wars are unusual, not the norm.”
The average sale-to-list price ratio, a measure of how closely homes are selling to their asking prices, fell to 99.8% in the four weeks that ended Aug. 28, Redfin said. The ratio was 101.4% in the same stretch last year. Ratios above 100% indicate homes on average are selling at or above their asking price.
Looking at the past few years there was fierce competition for relatively few homes on the market and very low-interest rates fueled bidding wars that often led homes to sell for well above their list price.
Now the market has cooled a bit since the spring as mortgage rates have had a large increase. With the higher rates homes are less affordable to many blessing the buyer pool meaning that sellers have less leverage.
“It’s significant that now buyers know that when they’re bidding on a home, chances are they can get it for less than the asking price and without a competing offer, which was not the case earlier this year,” Fairweather said.
It still is a strong market with homes still drawing multiple offers. Some 37% of homes purchased in the four-week stretch of August analyzed by Redfin sold for more than their list price. That was down from 50% a year earlier, Redfin said.
Buyers must still have to contend with rising home prices, but not as sharply as before. The national median home price jumped 10.8% in July from a year earlier to $403,800, according to the National Association of Realtors.