Sellers drop asking prices in response to higher mortgage rates, according to Redfin. (iStock)
On average, the proportion of U.S. home sellers reducing prices reached an all-time high earlier this fall. Approximately 7% of homes listed for sale saw a price drop during the four weeks ending on October 29, according to a report from Redfin.
Elevated mortgage rates are putting a financial strain on buyers’ budgets and pushing sellers to lower asking prices in response to the increased rates on monthly payments.
“With mortgage rates in the 7.5% to 8% range, buyers simply don’t have the budget they would have had two years ago or even one year ago,” Seattle Redfin Premier agent Patrick Beringer said.
Redfin emphasized the significance of pricing reasonably to draw in buyers.
“Some sellers are pricing too high because they have FOMO after their neighbor’s house sold well over asking price two years ago,” Beringer continued. “While low inventory is driving some competition and relatively affordable homes in popular neighborhoods are still selling fast, they’re getting two or three offers as opposed to 20 offers at the height of the market.”
If you’re aspiring to own a home, you can still find the best mortgage rates by shopping around. An online marketplace like Credible can help you compare your options.
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Home prices continued upward path in September
Throughout September, home prices remained on the rise despite record high mortgage rates, according to the latest CoreLogic Case-Shiller Indices report.
Home prices across the nation increased by 0.3% in September and are now 3.9% higher than they were a year ago. The 10-city composite gained 4.8% and the 20-city composite climbed 3.9% – the indices gauge home prices in major cities nationwide.
Home prices have climbed 6.6% since the beginning of 2023, even with increased mortgage rates. The September Case-Shiller depicts the progression of mortgage rates, ascending from 6.8% in July to 7.3% by the end of September.
“[The] Speeding up of annual home price growth reflects much of the pent-up demand that exists in the housing market amid very low inventories,” CoreLogic Chief Economist Dr. Selma Hepp said in a statement. “Nevertheless, home prices are feeling the weight of high mortgage rates, which will slow the rate of price growth in the coming months. Still, despite the dramatic increase in the cost of homeownership, home prices have risen 6.4% this year – meaningfully beyond expectations given the rise in borrowing costs.”
The average asking price in October 2023 remained unchanged from the previous year. On the other hand, higher mortgage rates have elevated the financing expenses for a standard home for sale. Homebuyers experienced a 7.4% year-over-year increase, paying over $166 more per month, according to Realtor.com’s October 2023 estimates.
If you’re ready to shop around for a mortgage loan, you can use the Credible marketplace to help you quickly compare interest rates from multiple mortgage lenders and get prequalified in minutes.
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How sellers can attain the best price for their home this fall
As mortgage rates surpass 7%, sellers can attract buyers and maximize their sale price by adapting their selling strategy, according to a recent Opendoor report. In addition to correctly pricing the property, sellers should consider the following measures.
- Highlight your home’s lush landscaping by choosing photos taken during spring
- Continue mowing the lawn and pick up fallen leaves and debris. Curb appeal still matters.
- Make certain your indoor heating and plumbing are up-to-date before the arrival of winter weather.
- Enhance indoor and outdoor lighting to highlight the home’s appeal for buyers passing by
- Market your home to attract potential buyers from other cities who are relocating for work.
- Steer clear of seasonal decorations and choose home accessories that work year-round, like houseplants, wall art and books.
Shopping for the best deal in a high mortgage rate environment can bring savings. If you’re trying to find the best mortgage rate, using the Credible marketplace to compare options from different lenders can help you find the best deal without affecting your credit score.
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