As home-price growth continues to slow and buyer demand wanes, fewer potential sellers are listing their homes. The number of new listings fell 15% in the four weeks ending Aug. 21, according to a new report from Redfin, released Thursday. This is the largest year-over-year decline since May 2020 at the start of the pandemic.
Overall, the total number of homes for sale fell 0.6% from the previous four-week period, the second consecutive week of decline and the second time the total housing inventory dropped since February. However, inventory is still up 4.3% compared to a year ago.
With fewer homebuyers in the market, sellers have realized that they need to price their properties more strategically and meet homebuyers closer to their expectations. These adjusted expectations have resulted in the share of homes for sale with price drops remaining at a constant 7.7% for the third consecutive four-week period.
“Sellers are coming to terms with the fact that volatile mortgage rates have dampened demand. Some sellers are pricing lower, and some homeowners are staying put because they’re nervous they won’t get a good offer or they’re hesitant to give up their low mortgage rate,” Chen Zhao of Redfin Economics Research said in a statement.
The change in seller expectations can also be seen in the 5% decline in the median asking price from the record high set in May, to $382,475. However, this asking price is still 10% higher than a year ago. Growth in the median sales price of homes has also slowed, rising just 6% year over year to $371,125, and down 6% from the record high of $395,373 set during the four-week period ending June 19. Two California metro areas, Oakland and San Francisco, saw their median sales price drop on an annual basis, falling 0.5% to $937,500 in Oakland, and 3.9% to $1.45 million in San Francisco.
In addition, the nationwide average sale-to-list price ratio dropped to 100.0%, down from 101.5% a year ago, indicating a decline in bidding wars and over-list price offers.
Despite cooling demand, homes are still selling at a fairly rapid pace, with the median number of days on market at 25 days, up slightly from 21 days a year ago under much hotter market conditions. During the four-week period, 36% of homes that went under contract had an accepted offer within their first two weeks on the market, down from 44% a year prior, while 24% had an accepted offer within one week, down from 30% a year ago.
“Because the number of homes for sale is no longer rising, buyers’ newfound bargaining power is reaching its limit,” Zhao said. “It’s worth noting that early demand indicators such as tours and requests for help from agents are elevated from their June lows and remain steady. So, there is a pool of interested buyers out there, but sellers need to price fairly to attract them. If more sellers and buyers find that middle ground on price, we could see sales strengthen a bit.”