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The median sales price of a home has dropped slightly year over year, but has yet to fall significantly. Read on to learn why.
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If you’re waiting for a nationwide substantial drop in home prices, recent research by Redfin suggests you could be waiting for quite some time.
The U.S. median sale price has cooled off slightly — dropping 2.8% year over year in April — but a lack of newly listed homes for sale has created too much demand to bring prices down by a significant amount.
Redfin’s research found that nationwide 22.40% fewer homes were listed for sale in the four-week period ending on April 23, compared to the year before. Areas with the most significant drop in numbers for newly listed homes were Oakland (-43.3%), San Diego (-39.8%), Seattle (-39.6%), Sacramento (-39.2%), and Riverside, California (-38.2%).
This is unusual, considering that spring and summer are traditionally the busiest months for buyers and sellers. And while it seems buyers are still showing up to the party, sellers are the ones who appear reluctant to make a move.
Redfin speculates that high mortgage rates have discouraged sellers from listing their homes. Not only would they potentially forfeit a lower monthly mortgage payment by selling, but they would also be entering the home-buying fray and clamoring with the rest over the few homes for sale.
Those few sellers who have listed their home aren’t waiting long to get offers. According to Redfin, around 47% of homes that went under contract in the four-week period ending on April 23 had sold within two weeks.
Fewer homes for sale means buyers are neck and neck in competition for what’s out there, and the multiple offers on newly listed homes are also keeping prices from dropping significantly. In fact, around 30% of homes in the same four-week period sold above their listing price, the highest percentage in six months.
Should you buy a home now or wait?
All things considered, the decision to buy a home doesn’t always align with the most favorable market conditions. If your finances are in order — you’ve saved a down payment or gotten pre-approved for a mortgage — now might be the right time to buy for you, regardless of macrotrends.
If buying a home isn’t urgent, however, waiting for different market conditions could prove beneficial, especially if it lets you save more down payment, improve your credit score, or pay off other debts. The median sales prices has trended downward, and the Fed has indicated it might be willing to pause interest rate hikes in 2023, which would be a first step toward eventually reversing course.
All in all, if the time doesn’t feel right for you to buy a home, go with your gut — a home is a big financial commitment and should only be pursued when you’re ready. In the meantime, set up a high-yield savings account to capture high interest rates and help your down payment keep pace with inflation. You could also lock in today’s rate with a certificate of deposit (CD), which might be savvy if you don’t plan to buy a home within the next three months.
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