Home-price growth slowed to 3% last month, and that’s not the only metric decelerating in today’s market. Inflation is also starting to slow which is helping bring down mortgage rates.
A new report from Redfin found the median home sale price fell 8.4% from its June all-time high, compared to home prices rising half a percent from the same period a year ago.
During the four-weeks ended Nov. 6, home-sale prices rose 3.2% on an annual basis, the smallest increase since July 2020.
These changes are reflected in the latest market activity, as early-stage homebuyer demand started leveling off and mortgage applications rose after a month and a half of declining.
Redfin deputy chief economist Taylor Marr says the recent report that the overall inflation rate is starting to back off makes it even more likely the Fed will slow rate increases.
“The inflation news is already helping to bring daily mortgage rates down,” she said. “However, Chair Powell has indicated that inflation would need to slow for several consecutive months before the Fed would lower its target for how high it raises rates next year.”
Marr added that still-high home prices are propping up inflation, but things are changing fast.
“The buyers who remain in this market are likely getting much better deals than the median asking or sale price reflects,” Marr said. “The typical home now sells for less than asking, price drops remain at a record high, and seller concessions are becoming increasingly common.”
For the week ended Nov. 6, pending home sales fell 34% from last year, marking the largest decline since January 2015.
Mortgage rates rose to 7.08% in the week ended Nov. 10, while mortgage applications rose 1% from the week before. Purchase applications were down 41% from last year.
Redfin found fewer Google searches for “homes for sale” during the week ended Nov. 10, down 28% from last year, but up a point from the week prior. Its Homebuyer Demand Index, which measures requests for tours and other services, was up 2.8% from the previous week, but down 34% from last year.
In the four weeks ended Nov. 6, active listings rose 10% from last year, while new listings were down 17% from last year.
The median asking price rose 7% from 2021 to $372,475, but was down 7% from a record high of $399,975 in May. Meanwhile, the median sale price increased 3% year over year to $359,250 – the slowest sale-price growth since the pandemic began.
Thirty-four percent of homes that went under contract had an offer within the first two weeks, showing little change from the previous four weeks but down 40% from last year. Twenty-eight percent of homes sold above list price, down from 43% last year and the lowest since July 2020.
The report also noted the monthly mortgage payment on a median asking-price home was $2,524 at the current 7.08% mortgage rate. That was up 50.7% from last year’s $1,687 when mortgage rates were 2.98% and up from a recent low of $2,203 in August.