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While rising mortgage rates, low inventory, and elevated home prices are forcing some house hunters out of the for-sale market, falling home prices suggest that buyers are actually in the driver’s seat of a post-pandemic market correction. Lower demand is causing homes to linger on the market for an average of 51 days, and as homes take longer to sell and builders complete new construction projects, the number of houses on the market is up nationally 33.5% year-over-year, Realtor.com reports.
A slower market is shifting a power dynamic that has given sellers an upper hand for the last several years. As home sales decelerate and a more cost-conscious buyer pool becomes less competitive, home prices are beginning to fall in some overheated markets, and those making home purchases are also regaining bargaining power.
It’s never good news for buyers—or sellers—when mortgage rates go up. But it’s important to keep it in perspective, especially as home prices are falling.
“Higher interest rates have two consequences on the real estate market,” says Cam Dowski, founder of We Buy Houses Chicago. “The first advantage is that they frequently reduce housing prices, which is advantageous for buyers. The second is that they deter some customers from entering the market, which benefits those who remain. The result is reduced buyer competition, which further reduces buyer risk, broadens buyer options, and lowers property prices.”
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