The US housing market, which has been plagued by soaring prices and limited supply, may be showing signs of improvement for homebuyers. Inventory, which is typically on the decline during this time of year, is actually increasing, according to Altos Research. Additionally, more home sellers are lowering their asking prices, as reported by Redfin. However, while these indicators offer a glimmer of hope, experts caution that the market still has a long way to go before fully recovering.
Despite a recent slowdown in sales activity due to high mortgage rates, there are some positive developments in the housing market. Builders continue to construct new homes, leading to an increase in housing inventory, which rose by 1.8% in the last week of September. Altos Research noted that this growth in inventory is significant considering the prevailing high mortgage rates. However, it is important to note that this does not indicate a flood of inventory, but rather a slight improvement in supply.
Moreover, there are signs that home prices may be heading lower. Altos Research reported that a larger number of homes on the market are receiving price cuts, with 37% of homes now priced below their original list price. Redfin also confirmed this trend, stating that more home sellers are dropping their asking prices. This indicates that sellers have acknowledged the impact of high mortgage rates on buyers’ affordability and are adjusting their prices accordingly. Nevertheless, with the anticipation of a Federal Reserve interest rate hike, sellers may need to be further open to price reductions in the future.
Overall, while these positive developments suggest a slight shift in the US housing market, experts emphasize that it is still a challenging environment for prospective buyers. High mortgage rates continue to deter buyers, making it crucial for sellers to adapt and negotiate on prices. Additionally, the market’s recovery will depend on factors such as the availability of affordable financing and more substantial increases in housing supply.