- The housing market is starting to cool down, and that could usher in a good opportunity for homebuyers, Zillow says.
- The percentage of home listings that had a price cut jumped to 9.2% in the week ending September 16.
The US housing market is starting to cool down, and that could usher in a good opportunity for homebuyers as prices get slashed, Zillow says.
Though the housing market typically cools off during the fall months, more homes are seeing price cuts this year than they have in the past, the real-estate-listings site said in a note on Thursday.
The percentage of home listings that had a price cut jumped to 9.2% in the week ending September 16, topping the 7.9% rate for the comparable period in 2019, Zillow said, calling it "unusually high" even when considering seasonal shifts in the housing market.
That trend has been sparked by a confluence of factors paving the way for a slightly more affordable housing market. Home prices have been pushed higher over the past year due to a shortage of inventory, but the supply glut has eased over the last few weeks, Zillow says, with new home listings rising 4% month-per-month in August.
Demand has also been a factor keeping prices elevated, but buyers have started to pull back slightly due to pressure from higher mortgage rates. The average 30-year fixed mortgage rate notched 7.31% last week, Freddie Mac data indicated — the highest level in nearly 23 years. Weekly mortgage applications meanwhile fell 1.3%, the latest Mortgage Bankers Association survey suggested.
"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," the Zillow senior economist Jeff Tucker said.
Improved affordability provides a small relief to homebuyers who've been slammed by one of the most unaffordable housing markets ever.
But affordability conditions are unlikely to improve significantly until mortgage rates dial back, experts warn, which probably isn't happening anytime soon. Redfin estimated that rates would most likely ease to just around 6% by the end of 2023.
Zillow economists, meanwhile, previously forecast home price increases through the first half of 2024 despite the current cooldown. Home prices could jump as much as 5% by August 2024, the firm's research team said.