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Homes just keep getting more expensive — but signs point to a possible power shift, with some buyers seeing hope on the horizon.
According to Realtor.com, the median US listing price increased to a new all-time high of $405,000 in March — that's a 13.5% increase since this time last year. As prices climbed, buyer demand finally began to wane after two years of red hot competition. Of course that means many Americans are priced out of the housing market completely, but those left could finally gain some power.
"Buyer demand is moderating in the face of high costs, and we're beginning to see more homeowners take price cuts on their listings and overall inventory declines lessen in response," Danielle Hale, Realtor.com chief economist, told Insider. Though the average listing price was $405,000, 6% of homes actually sold at a lower price than they were listed.
Overall in March, the housing market began to show signs of moderation. Newly-listed homes decreased by 3.4% year over year and sellers listed rates 12.2% lower than they did from 2017 through 2019 March levels. As demand faltered, the number of pending listings declined by 7.4% on an annual basis, suggesting the market is softening as buyer competition eases.
"Despite the $405,000 price tag, March data reveals we are starting to take some steps towards a more balanced market," Hale said, adding that potential buyers should aim to find a home now — before interest rates increase further.
Mortgage rates have returned to pre-pandemic levels: 4.42% for a 30-year, fixed-rate loan, according to Freddie Mac. That's significantly up from a pandemic low of 2.68% in December 2020, and means homeownership is getting even more expensive.
As the cost of homeownership rises, homeowners are slashing their asking prices. According to Realtor.com, the share of homes with price reductions increased from 5.8% in March 2021 to 6% this year. Although the rate remains below typical 2017 to 2019 levels, researchers say that twenty-five of the nation's largest 50 metros saw the share of price reductions rise in March — compared to just 18 in February.
"For buyers still actively searching for a home, this could provide some relief as competition declines," Hale said.
If rates do rise further, Hale says buyers already concerned with affordability are likely to be priced out of the market. However, with less buyer competition, the amount of homes available for sale could largely increase and reduce pressure on home prices. This in turn should help the market regulate itself and boost homebuyer purchasing power.
"Assuming all these factors and new construction hold steady, we could begin to see inventory increases this summer – welcome news for buyers who have endured pandemic home shopping and can continue their journey despite higher buying costs, " Hale said.
