The highest share of sellers on record dropped their list price during the four weeks ending June 12 as mortgage rates shot up to levels not seen since 2008, dwindling the pool of home shoppers.
Still, homebuying has never been more expensive. The typical buyer with a 30-year fixed-rate mortgage is looking at a monthly payment of $2,514, up from $1,692 a year ago. But those who remain in the market may notice they face less competition from other buyers. Homes are more likely to sit on the market for a few weeks, compared to last year when they would go under contract within a week, and home prices are being bid up less often than they were earlier in the spring.
“The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” said Redfin deputy chief economist Taylor Marr. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out. While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one.“
“If it weren’t for the surge in mortgage rates, the housing market would still be in a boom right now,” said Redfin Bay Area real estate agent James Cappello. “Demand from homebuyers was still extremely high as recently as February, but rates are making it really tough. Going from 3% to nearly 6% almost instantly has scared a lot of people out of the market.”
Unless otherwise noted, the data in this report covers the four-week period ending June 12. Redfin’s housing market data goes back through 2012.
Refer to our metrics definition page for explanations of all the metrics used in this report.
