Buyers may finally have the upper hand in the housing market. (iStock)
As homebuyers back out of homes, some home sellers have been forced to lower their asking prices in order to complete the sale, Zillow reported recently. report Said.
Nearly a quarter of sellers were forced to reduce their prices to generate purchasing interest from struggling buyers. 24.5% of listings were reduced in price in June, up from 23.8% the previous month. Lack of buyer enthusiasm is also contributing to an increase in inventory. The total number of homes on the market increased 4% from May to June and is nearly 23% above last year’s lowest level. Properly priced and well-advertised properties are still selling relatively quickly.
Zillow said market dynamics are returning to pre-pandemic normal in terms of competition and negotiating power among buyers.
“We’re seeing more homes being left on the market because they’re not competitively priced or poorly marketed,” said Skylar Olsen, chief economist at Zillow. “Sellers are more likely to lower prices to attract buyers struggling with high home prices.”
“For many years, the housing market has been characterized by fast sales and limited options,” Olsen continued. “We are now approaching pre-pandemic conditions in terms of competition, if not costs. Slowing price appreciation and, in some areas, falling prices amid lingering easy mortgage rates, will encourage buyers to postpone saving for a down payment.”
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Home price growth slows
Homebuyers continue to struggle to get on the home buying ladder, primarily due to high borrowing rates and rising home prices that make it difficult to afford a home. The typical mortgage payment is up 6% over last year and has increased 112.5% since the pandemic, according to Zillow.
The good news is that there’s evidence that home price appreciation is slowing in some markets, according to Zillow. Home prices rose 0.6% in June to $362,482, but the monthly increase was the lowest in June since 2011. Zillow projects that home prices will rise just 1% nationwide through June 2025, which may offer some relief to buyers currently entering the market.
“Home price growth is slowing as inventory increases,” Zillow said. “Annual increases are at a reasonable 3.2% nationally, down from a peak of 4.6% in March 2024. Monthly gains slowed to 0.6%, the slowest June increase since 2011. Slower home price growth in the coming months could provide an opportunity for struggling buyers to catch up.”
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Mortgage interest rates are on the decline
Mortgage rates have fallen for consecutive weeks, dropping to their lowest levels since mid-March, as strong economic data and positive inflation reports offer reassurance that the Federal Reserve may finally cut rates.
The Fed, which has kept its benchmark interest rate in the 5.25% to 5.50% range for the past year, could lower borrowing costs soon. At the Washington DC Economic Club Earlier this week, Fed Chairman Jerome Powell said the central bank won’t wait for inflation to hit its 2% target before cutting interest rates because of the policy’s longer-term implications. Instead, it aims to gain greater confidence that inflation will return to target before starting to cut rates.
“Fortunately, the more modest June employment report and a decline in the CPI are solid numbers that should help give the Fed more confidence that the economy is moving in the right direction and raise expectations that the July FOMC statement will signal a rate cut,” Jiayi Xu, economist at Realtor.com, said in a statement.
If you’re ready to search for the best rate on your new mortgage, consider visiting an online marketplace like Credible to compare rates from multiple lenders at once.
High homeowners insurance rates are scaring Florida home buyers away. Other states face the same problem.
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