Home Sales Continue to Decline as Buyers Wait for Housing Costs to Come Down

Pending home sales and new listings are recording their biggest year-over-year drops since the start of the pandemic as a growing number of prospective buyers are discouraged by 20-year high mortgage rates, Redfin reports. Mortgage applications are at their lowest level in 25 years, and with more interest rate hikes expected by the end of the year, sellers across the country are being forced to lower their asking prices.

Homes are taking twice as long to sell as they did in the spring, and as more buyers are pinched for affordability, the typical home is selling for 1% less than its final asking price, the largest discount since August 2020.

“With rates sitting above 6.5% for three weeks and no indication they’ll come down before the end of the year, people are only buying and selling homes if they need to,” said Redfin Economics Research Lead Chen Zhao. “Prospective buyers are waiting for prices and/or mortgage rates to come down and sellers want to squeeze as much money out of their sale as possible. Homes will eventually sell, but it may take a few months, and sellers need to meet buyers where they are. That means lower prices and negotiations, including things like giving buyers a credit to buy down their mortgage rate and paying for home repairs. Prospective sellers may also consider renting out their home for a few months until demand recovers.”

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