- US homebuyers might see a “sweet spot” in the market this fall, said a Zillow economist.
- There are more motivated sellers and more active listings overall than at any time since last December, he wrote in a report.
- Zillow estimates that about 10% of home listings saw a price cut in the week ending September 16 — the most since November.
US home prices have risen in the last year due to higher mortgage rates, but Zillow thinks it’s a good time to buy — if you have the budget.
Zillow’s assessment is based on its analysis that a larger proportion of sellers are relenting on their asking prices, according to a Thursday report by senior economist Jeff Tucker.
According to the real estate company, 9.2% of home listings saw a price cut in the week ending September 16 — the highest share since November.
It’s not just about the price. Potential homebuyers also have many more choices.
“For determined buyers, with enough budget room to accommodate the recent jump in mortgage rates, this fall is looking more and more like a sweet spot: There are more motivated sellers and more active listings overall than any time since last December, improving buyers’ chance to find the right fit,” Tucker wrote in the report.
US home sales have slowed as houses have gotten less affordable, thanks to rising prices which have been driven higher by an inventory shortage and high mortgage rates. The average 30-year fixed mortgage rate hit a 23-year high of 7.31%, according to the most recent Freddie Mac data.
“This fall’s high rate of price cuts either means buyers have pulled back, sellers have overreached with too-high list prices, or some combination of both,” Tucker added.
The price cuts on listings also coincide with an increase in new listings in August, as compared to July — which was “unusual,” wrote Tucker.
That’s because the number of listings has been falling since July last year, so the bump in August could mean that the worst of the “listings drought” may be over, he added.
Analyzed together, the bumper home listings in August and weaker homebuyer demand means that more inventory is coming back online for potential buyers.
Still, buyers “have ample reason to be balking right now” as mortgage repayments have surged, he added.
Higher home prices mean that a typical monthly mortgage payment has reached $1,896 in August —18% higher than a year ago, according to Zillow. In all, the monthly repayment for a mortgage — including the principal and interest — has risen a whopping 122% in the past three years.
The value of the US housing market has surged about 50% from the pre-pandemic days in January 2020 to nearly $52 trillion now, Zillow reported Tuesday.
