For the past three years, homes have been flying off the market at an unbelievably fast rate. Many homeowners looking to sell their house have been able to put their house on the market and get it sold in less than a month, and sometimes less than a week. However, the pricing market has taken a turn in the past few months, moving away from the heat of the past few years.
According to CNBC, home sellers are slashing home prices at the highest rate in nearly eight years. As homes are taking longer and longer to sell, sellers are forced to cut prices in order to get their house off the market. In particular, home prices are being sliced at drastic rates in the West, where the housing market was the hottest merely a few months back.
In research conducted by Redfin, it was found that in the month preceding September 16th, more than a quarter of the homes listed on the market saw their sale price drop. By definition, a price drop is a decrease in home price by at least 1%. According to a Taylor Marr, senior economist at Redfin, “After years of strong price growth and intense competition for homes, buyers are taking advantage of the market’s easing pressure by being selective about which homes to offer on and how high to bid. But there are some early signs of a softening market, and the increase in price drops may be another indicator that sellers are going to have trouble getting the prices, and the bidding wars, that they may have just months ago.”
Despite the drop in home prices, housing reports and experts say that there is still a shortage in homes available, particularly for homes listed on the lower end of the spectrum. In August of this year, the number of homes available did increase for the first time in three years, according to the National Association of Realtors, but there is much more construction that needs to occur to mitigate the housing shortage. According to Lawrence Yun, the chief economist for the National Association of Realtors, “While inventory continues to show modest year-over-year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand. Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory — especially moderately priced, entry-level homes — would propel sales.”
Looking at the numbers from the National Association of Realtors, total existing home sales were at a market near 5.2 million in August with the median home price just shy of $260,000. For a third straight month, the percentage change in sale price for the median home increased year-over-year. Finally, 42% of sales occurred in the South, 24% in the Midwest, 13% in the Northeast, and 21% in the West.