Even as home prices hit new highs, experts say there are signs the housing market is getting better for buyers in some locations.
The median cost of an existing U.S. single-family home was $426,900 in June, a new all-time high, according to the National Association of Realtors. About 3.89 million homes were sold in June, down 5.4 percent from May, according to the NAR.
While mortgage rates have declined since peaking in May, borrowing costs remain expensive for buyers. The average 30-year fixed-rate mortgage in the U.S. jumped to 6.78 percent from 6.77 percent on Thursday, according to data from Freddie Mac via the Federal Reserve.
Despite these headwinds, some indicators show that the housing market is pulling away from the seller’s market.
That doesn’t mean it’s a buyer’s market — However: “The term buyer’s market is always a bit difficult to work with,” said Chen Zhao, head of financial research at Redfin, an online real estate brokerage. There are “rules of thumb” to determine a buyer’s purchase, such as having more than four months of supply, he said.
“The market is definitely leaning more towards buyers, I would say maybe it’s coming into more balance,” Zhao said. “Things are better, but they’re still not good.”
Orphe Divounguy, senior economist at Zillow, agreed.
“We’re still across the country somewhat in a seller’s market, not yet a buyer’s market,” he said. “However, there is good news for buyers on the horizon.”
4 signs of a ‘more neutral market’
There is still a challenge for affordability in general. But those buyers who can definitely afford to buy, “are realizing that the pendulum is swinging slightly in their favor,” Divounguy said. “Things are moving towards a more neutral market,” he said.
Here are four signs that can help you identify if the housing market in your area is more buyer-friendly:
1. Homes stay on the market longer
As homes sit on the market longer, buyers may have the opportunity to snap up a property below its asking price, Daryl Fairweather, chief economist at Redfin, told CNBC.
About 64.7% of homes on the market in June have been listed for at least 30 days, up from 59.6% a year ago. according to Redfin. Homes remain on the market a little longer because mortgage rates and prices are still generally high for buyers.
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According to Zillow data, homes took 46 days to sell, compared to 35 days last year and 19 days in 2021, Divounguy said. “So houses stay on the market longer.”
2. Buyers retreat
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In some areas, homebuyers walk away from a home purchase after making it to closing.
About 56,000 home purchase agreements were canceled in June, Redfin were found. Some of these abandoned deals may result from buyers reconsidering their budget and needs.
“Buyers are becoming more selective,” wrote Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area. Redfin report. “They’re arguing because of secondary issues because the monthly costs associated with buying a home today are too high to justify not having everything on their must-have list.”
“You really don’t think about insurance and taxes,” said Selma Hepp, chief economist at CoreLogic. “Then you get the first appraisal from a lender and then you decide to back out.”
3. Sellers have more competition
In other cases, buyers may become more selective as more listings appear in their area.
Total housing inventory recorded at the end of June was 1.32 million units, up 3.1% from May and 23.4% from a year ago. Unsold inventory is on 4.1 months supply, up from 3.7 months in May and 3.1 months a year ago; according in NAR.
Competition is declining fastest in the South, where all major Southern markets except Dallas and Raleigh are either neutral or shopper-friendly, according in the June 2024 Zillow Housing Market Report.
“With more inventory, that certainly means buyers have more options,” Hepp said, “but that’s very peripheral. And those with the most increases in inventory are struggling with other issues.”
4. Sellers drop prices
For a few years, home sellers have had the advantage of selling their homes for more than they bought them for because valuations have skyrocketed, coupled with the fact that homes have been in short supply for so long.
“Sellers need to do a little bit more to attract buyers,” Divounguy said. “We see one in four sellers are lowering their prices — the most for any June in the last six years — to try to sway buyers.”
About one in five, or 19.8%, of homes for sale in June had a price cut, the highest level of any June on record, according to Redfin. That’s up 14.4% from a year ago.
Homebuilders are also trying to attract buyers: About 31% of builders are cutting prices to boost home sales, up from 29% in June and 25% in May. according in a July 2024 survey by the National Association of Home Builders.
