Price Declines, Easing Monthly Payments Offer Buyers Some Relief

According to a new Redfin report, U.S. home sale prices declined year-over-year for the third consecutive week. The median home sale price stood at $388,604, a 0.4% decrease from a year earlier. This was the third consecutive week of falling prices, following three years of increases. Monthly payments fell to their lowest level in five weeks. The median monthly mortgage payment was $2,777, down from an early-October peak of $2,811. Costs eased as mortgage rates and sale prices gradually declined.

Homebuying activity weakened overall, as pending home sales dropped 0.6% from the previous week, reaching their lowest level in records dating back to 2021. As prospective sellers responded to sluggish demand, new listings also fell 1.5% from the previous week, reaching their lowest level since January. The slow market is creating more negotiating leverage for buyers.

Those actively looking may be able to secure lower prices and/or other concessions from sellers. Buyers also have more properties to choose from than they did a year ago and face less competition. The number of homes on the market is up 2.1% year-over-year, and homes are taking slightly longer to sell.

Note: This data is seasonally adjusted.

Buyers Drawing Back as More Sellers Enter the Market

On the other hand, homebuyers have greater negotiating power than at any time since the housing market collapsed following the Great Recession. In September, the U.S. housing market had an estimated 62.6% more sellers than buyers—the widest gap in records going back to 2013.

When sellers outnumber buyers, buyers generally gain negotiating leverage because they have more choices. For this reason, a market with significantly more sellers than buyers is known as a buyer’s market. Redfin experts classify a market as a buyer’s market when sellers exceed buyers by more than 10%, and as a seller’s market when sellers are more than 10% fewer than buyers.

If the difference falls within 10% in either direction, the market is considered balanced. Overall, pending sales declined in every single metro Redfin analyzed, for the fourth week in a row.

Note: Redfin’s metro-level rankings data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.

“This is a buyer’s market born out of caution, not strength,” said Asad Khan, Senior Economist at Redfin. “Buyers have tremendous negotiating power in most of the country because so many other would-be buyers have been priced out of the market, or scared off by economic uncertainty. For house hunters who have the budget and job security to purchase a home in today’s market, that creates a unique opportunity: They can be picky, negotiate and even walk away if the deal doesn’t make sense financially or they find something they like better. The irony is that in terms of supply, these are some of the best conditions for buyers in many years–but they have arrived at a time when costs are so high that fewer people can afford to take advantage of them.”

In recent years, high housing costs and widespread economic uncertainty have led many prospective buyers to step back, contributing to today’s imbalance between buyers and sellers. The divide between buyers and sellers widened in September as buyers retreated while sellers continued to enter the market.

An estimated 928,892 homebuyers were active nationwide in September, the lowest figure in records dating back to 2013. This was a 2.4% decrease from the previous month and marked the fifth consecutive monthly decline. By contrast, an estimated 1,510,784 home sellers were in the market, the highest number since March 2020. This represented a 1.2% increase from the prior month.

Homeowners continue to list their properties despite weakening demand, as many have stopped waiting for better conditions. After years of hoping mortgage rates would fall or demand would recover, some sellers see little benefit in holding out, particularly while prices remain high enough to deliver a profit. Others are selling now because they fear prices may decline if they wait.

Some have no choice but to move because of circumstances such as a new job, a growing family, divorce, or retirement. However, homeowners who do not need to relocate may choose not to list—or may withdraw their homes from the market. Many have considerable equity, and a relatively strong job market generally leaves little pressure to sell.

To read the full report, click here.