A new Redfin report reveals a significant shift in the housing market: for the first time since the pandemic began, the typical US home is selling 0.3% below list price. Daryl Fairweather, Redfin's chief economist, provides insights into this trend.

Fairweather observes "early softening in the market," noting that buyers can now negotiate prices. She emphasizes that while price is important, it "shouldn't be the end-all-be-all," and buyers also have room for negotiation on other terms.

The increase in new home sales is creating more competition among sellers, leading to price drops and incentives. Fairweather notes that sellers are working harder to "meet buyers where they're at" in this changing market.

Regarding interest rates, Fairweather tells Yahoo Finance, "Buyers are so sensitive to rates that any little movement will pull some back into the market. If rates come down, we'll get buyers back into the market, and we'll... be back where we are in terms of affordability."

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This post was written by Angel Smith

Video Transcript

Redfin has a new report out revealing for the first time since the start of the pandemic, the typical US home is selling for less than list price here with more.

We've got Darryl Fairweather who is the chief economist at Redfin.

Darryl, always a pleasure to grab some time with you.

Can you help us break down what you're seeing in the data here as it was really for the four weeks ending June 23rd here where this typical home was selling for less than its list price.

We're starting to see some early softening in the market homes taking a bit longer to sell, they're selling for under asking price on average.

And that means that buyers are getting a little bit more negotiating power, those listed prices, they shouldn't be taken as the end all be all you can come in with an offer under asking price, especially if it's a home that's been sitting on the market for a while.

But what are we seeing in the new listings right now?

How is that kind of moving in the market as as of this juncture, new listings are up, they're not up enough to get us back to levels of 2022 or before that.

But they are an improvement from last year, which is why we're starting to see more competition among sellers to lower their prices, more price drops home selling for below asking.

There's a bit more pressure on sellers to meet buyers where they're at.

They're having to work a bit harder is, is that perhaps leading to more staleness for some of the older listings?

And then where does that kind of also impact the pricing uh situation too?

Well, by historical standards, this is still very much a seller's market.

If you price appropriately, your home will sell quickly with multiple offers.

But there are some homeowners who really need a lot of money to move probably because they have those super low mortgage rates from before and maybe they'll just d list their home instead of having it sell for a price that's too low for them.

Where should buyers expect some relief when, when you feel like and you are navigating an environment where we're looking at these all time high home prices here on average, where should buyers perhaps be able to say, ok, or at least chart their own path into entry into this market.

Well, it is difficult but not in every single market in places like Florida and Texas, the market is softening even more so I think buyers can have more negotiating power.

There.

Another bit of silver lining is that mortgage rates are likely going to fall.

We got some good inflation data just today.

So that's a sign that the FED will probably cut this year and we may see lower mortgage rates because of that mortgage rates have come down from, from May's six month high weekly average still just under uh about 7% here.

And so if we do see that, that cut, what type of perhaps wave of new buyers are we expecting to emerge, buyers are so sensitive to rates that any little, any little movement in rates will pull them back into the market.

So I expect that if rates come down, we'll get buyers back in the market and we'll kind of be back where we are in terms of affordability.

There may be a slight window where rates come down before prices re accelerate, but timing that can be very difficult, especially when there's so few homes for sale.

I think buyers should focus more on the home.

That's right for them.

It's within their budget instead of trying to time the market to save some money.

Ok, I wanna end here with some actionable tips for those who are going out this weekend trying to scout out some properties or perhaps even those that have a property listed.

Let's let's start with the buyers though.

What are some tips for buyers who are charting their own path this weekend and trying to see what seems right for them and what's within their price range.

Well, the most important thing is to stay within your budget.

There's, it can be really dangerous to go above and beyond because you're not putting money towards savings and that can be just dangerous.

So just make sure you stick to your budget even though prices are high and mortgage rates are high, don't go too far with your offer.

The second thing is to know that homes that have been on the market for longer are probably going to sell for under their listed price or they will have a price drop at some point.

So keeping an eye out for those listings that have been overlooked can be a way to get a deal.

And then finally we do anticipate that mortgage rates will fall.

But like I said, I don't think it's the best idea to try to time that because there will be more competition later.

So just focusing on what's within your control, like your budget and the listings that are out there, I think is the best way to go about it.