A townhouse for sale in the Upper East Side neighborhood of New York.
Adam Jeffery |
Real estate prices are falling in some areas, although they are still higher than they were a year ago.
Several new reports show that price increases are slowing and home sellers are gradually giving way after a stagnant market in the spring.
According to real estate brokerage Redfin, in the four weeks ending June 23, the typical home sold for slightly less than asking price — down 0.3 percent — for the first time since the Covid-19 pandemic began, when home sales ground to a halt. One year ago, the typical home sold for list price at this time. Two years ago, it was about 2 percent above list price.
But that doesn't mean the housing market is collapsing. Last month, just under two-thirds of homes still sold above asking price, but that's the lowest share since June 2020. While most sellers are still listing their homes at higher prices than comparable homes a year ago, some admit they just can't get those prices.
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Mortgage interest rates remain high. According to Mortgage News Daily, the average interest rate for a 30-year fixed-rate mortgage has been just above 7% for the third month in a row.
The widely followed S&P Case-Shiller index showed that home prices in April were 6.3% higher than they will be in April 2023. Prices in May continue this trend. Home prices are now 47% higher than they were in early 2020, with the median sales price now five times the median household income.
CNBC got an exclusive early look at home price data to be released next week from another index from ICE Mortgage Technology, which shows that annual home price growth fell to 4.6% in May from 5.3% in April, the lowest growth rate in seven months.
Supply is increasing, causing prices to cool. According to Realtor.com, total active listings are now 35% higher than they were a year ago. To put that in perspective, even after the recent growth, inventory is still more than 30% below typical pre-pandemic levels.
“Some buyers think they can get a bargain because they hear the market is cool, and some sellers think every home will sell for top dollar no matter what condition it's in,” Marije Kruythoff, a Los Angeles-based Redfin agent, said in a press release. “In reality, it all depends on the home and the location.”