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As housing market cools, homebuyers regain leverage

A house with a “Sold” sign in Surfside, Florida. (AP file photo/Wilfredo Lee)

LOS ANGELES — Years of soaring home prices and soaring mortgage rates remain hurdles for many would-be buyers, but new data shows they are regaining some influence at the negotiating table as the market of housing slows down.

An analysis of home sales data by Redfin shows that, on average, US homes purchased over a four-week period in August sold for less than sellers were asking. That hasn’t happened since at least March 2021, according to the real estate brokerage.

“The only times you get houses above list price is when there’s a bidding war, and those weren’t happening regularly,” said Daryl Fairweather, Redfin’s chief economist. “And we’re back to a place where bidding wars are unusual, not the norm.”

The average sales-to-listing price ratio, a measure of how close homes are selling to their asking prices, fell to 99.8% in the four weeks ending August 28, a said Redfin. The ratio was 101.4% in the same sequence last year. Ratios above 100% indicate that homes are selling at or above the asking price on average.

For most of last year and this year, fierce competition for relatively few homes on the market and rock-bottom interest rates fueled bidding wars that often led to homes selling well. above their list price.

This has remained the dominant trend until recently, even though the housing market has cooled considerably since the spring, with mortgage rates rising sharply above where they were a year ago. Higher mortgage rates make homes less affordable, reducing the pool of home hunters, which leaves sellers with less leverage when negotiating with buyers.

On average, 7.5% of homes for sale in the four weeks of August tracked by Redfin saw a drop in price each week, a record high, the company said.

The fact that the typical home is now selling below asking price is a sign that the housing market is becoming a bit more balanced, or less skewed, in favor of sellers.

“It is important that buyers now know that when they bid on a house, there is a good chance that they can get it for less than the asking price and without a competing offer, which was not the case. earlier this year,” Fairweather said.

This does not mean that some houses do not offer several offers yet. Some 37% of homes purchased in the four weeks of August analyzed by Redfin sold for more than their list price. That was down from 50% a year earlier, Redfin said.

And buyers still have to deal with rising house prices, but not as sharply as before. The national median home price jumped 10.8% in July from a year earlier to $403,800, according to the National Association of Realtors.