High housing costs—and high temperatures—are keeping prospective homebuyers on the sidelines, making it more common for homes to sell below list price. This could be a sign that home-price growth will lose momentum in the coming months.

(NASDAQ: RDFN) — The typical U.S. home that sold during the four weeks ending June 23 sold for 0.3% less than its asking price, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. This marks the first time the typical home has sold under list price this time of year since the onset of the pandemic in 2020, when the housing market nearly ground to a halt. The typical home sold for exactly its list price one year ago, and roughly 2% above its list price two years ago.

Additionally, just under two-thirds (32.3%) of U.S. homes sold over asking price during that period. That’s the lowest share of any June since 2020, and down from 36% a year earlier. Nearly 7% of home sellers dropped their asking price, on average, the highest level since November 2022 and up from 4.7% a year ago.

The likelihood of homes selling below asking price is rising because there’s more supply than demand, at least for certain types of homes in certain parts of the country. New listings are up 8.2% year over year nationwide, while pending home sales are down 4.3%, the biggest decline in four months. Most inventory is growing stale; over 60% of homes are listed for at least a month without going under contract.

Buyers are shying away due to sky-high housing costs. The median home-sale price is up 4.9% year over year to an all-time high of $397,250. While mortgage rates have come down from May’s six-month high, the weekly average is still near 7%. The typical homebuyer’s monthly payment is $2,785, just about $50 below the record high.

Record-breaking heat is another reason some buyers have taken a backseat recently. “I’ve heard some clients say, ‘it’s so hot outside I don’t want to see anything,’” said Joe Hunt, a Redfin manager in Phoenix. “But if mortgage rates were lower, I doubt heat would be keeping buyers away.”

Buyers may get a slight respite soon on costs soon. The growing likelihood that homes sell below asking price, along with the high share of sellers dropping their prices, could mean sale-price growth loses momentum. Plus, mortgage rates may decrease further if inflation continues to cool.

Redfin agents say both buyers and sellers should be realistic about prices in today’s market. Sellers shouldn’t overprice, and buyers should know they may be able to negotiate— but only if a home has been on the market without much activity for at least a few weeks.

“Some buyers think they can get a deal because they’re hearing the market is cool, and some sellers think every home will sell for top dollar no matter the condition,” said Marije Kruythoff, a Los Angeles Redfin Premier agent. “In reality, everything depends on the house and the location. The hottest properties in this area are either move-in ready or complete fixer-uppers. The homes in between, those that are pretty nice but not updated, are sitting on the market longest. Sellers of that type of home often benefit from making cosmetic repairs before listing, which we offer through Redfin Concierge Service. And buyers who do encounter middle-of-the-road listings without much wow factor should consider trying to negotiate.”

For Redfin economists’ takes on the housing market, please visit Redfin’s “From Our Economists” page.

To view the full report, including charts, please visit:

https://www.redfin.com/news/housing-market-update-homes-selling-below-asking-price-june-2024

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

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