The housing market is in the beginning stages of a much-anticipated correction, but home prices are still soaring to new highs. Paired with steadily rising interest rates, that lack of affordability is forcing buyers to step back from bidding wars and pump the brakes on home purchases. In order for market activity to pick back up, sellers are going to have to adjust their asking prices to meet buyers halfway, says Realtor.com.
Also, as competition dwindles and for-sale properties spend more time on the market, buyers are beginning to negotiate, and in many cases, it seems to be working. The number of homes with price reductions doubled in June compared with just a year earlier.
The disconnect appears to be that home sellers have yet to adjust to this new reality—the one where they can’t slap whatever price they’d like on their properties, sit back, and wait for the bidding wars to commence. Surging mortgage rates have made it impossible for many buyers to afford what they could have just a few months ago.
Meanwhile, record-high home prices are up more than 31% over the past two years, according to Realtor.com June list price data. And they keep rising. Something seems like it needs to give.
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