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    Redfin Predicts Home Prices Will Dip 1% by the End of the Year, and Reports That Purchases Are Getting Canceled at Near Record Rate

    (NASDAQ: RDFN)—Redfin economists expect the median U.S. home-sale price to fall flat in the third quarter, and fall 1% year over year by the fourth quarter. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Redfin expects mortgage rates to remain elevated near 7% for the remainder of the year.

    This marks a stark reversal from years of home-price increases. Aside from a brief period in 2023, home prices have been rising year over year since 2012 due to a prolonged seller’s market.

    Redfin also issued a report today about the rise in home-purchase cancellations, which is discussed further down.

    Sale Prices Will Decline Because Inventory Is Rising While Sales Are Falling

    Home prices are expected to decline nationwide because there are more home sellers than homebuyers in the market. Homebuying demand is down, sales of existing homes fell 1.1% year over year in April to a six-month low, and the typical home that did sell took 40 days to do so–five days longer than a year earlier. On the selling side, total inventory rose 16.7% year over year to its highest level in five years, and new listings rose 8.6%.

    The U.S. housing market has been lackluster since mortgage rates rose sharply at the start of 2022, and has slowed further in the last several months due to widespread economic instability and stubbornly high housing costs.

    More homes for sale, combined with fewer people interested in buying them, is expected to push U.S. sale prices down in two key ways:

    • Discounts on list prices. It’s a buyer’s market. That means homebuyers in many parts of the country are able to successfully negotiate prices down, especially for fixer uppers and/or homes that aren’t located in desirable neighborhoods.
    • Lower list prices. The longer the market is slow, the more sellers will come to terms with the fact that they can’t sell their homes for what they could have at the height of the market.

    Redfin agents advise buyers looking for a deal to target homes that have been on the market for more than a few weeks. Those offer a shot at negotiation: Buyers should submit offers for under list price and/or ask for concessions, like mortgage-rate buydowns or money for repairs. Nearly half of today’s sellers are giving concessions, just shy of the highest level on record. Sellers should price their homes in line with the market from the start to avoid price drops. Some sellers may consider pricing slightly under comparable homes in the same neighborhood to entice buyers.

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    Redfin Predicts Home Prices Will Dip 1% by the End of the Year, and Reports That Purchases Are Getting Canceled at Near Record Rate (NASDAQ: RDFN)—Redfin economists expect the median U.S. home-sale price to fall flat in the third quarter, and fall 1% year over year by the fourth quarter. That’s according to a new report from Redfin (redfin.com), the technology-powered real …