A key tipping point in the housing market is coming into view as momentum shifts more firmly in favor of buyers over sellers.
While the median U.S. home-sale price was up 1.9% year over year in the four weeks that ended May 25, prices in 11 of the 50 most-populous U.S. metro areas are falling, according to Redfin data. They’re led by Oakland, Calif. (-4.9%); Dallas (-4.5%); Jacksonville, Fla. (-3%); Austin, Texas (-2.5%); and Seattle (-1.4%).
It would mark a sharp reversal from earlier this year and recent history. In the first quarter, prices rose 3%, and second-quarter prices are expected to be up 2%. Meanwhile, prices have been rising since 2012, except for a blip in 2023, amid a prolonged seller’s market.
And when those home sellers list their properties, they’re staying on the market longer, forcing some to lower their asking prices.
“Sellers are realizing we’re in a new market, which is making them flexible,” Venus Martinez, a Redfin agent in Los Angeles, said in the report. “A lot of sellers, especially those who may have bought at the top of the market and need to sell, are willing to accept less money for their homes, give concessions to buyers, and even negotiate commissions. Buyers are more likely to be able to negotiate if a home has been on the market for more than a few weeks, or if it has fallen out of contract.”
While mortgage rates will likely remain high, Redfin noted that wages will continue rising, meaning that home affordability should still improve in the second half of the year.
Of course, if buyers start to flood the market, then the pricing landscape will change with it. On the other hand, a prolonged slump in activity is also typically bad news for the overall economy.
“Residential fixed investment is the most interest rate sensitive sector in the economy and is now signaling that mortgage rates around 7% are too high to sustain an expansion,” Citi said.
