Do you know how to tell if the housing market is becoming buyer-friendly? Find out and learn when to take advantage of it!
Despite home prices reaching record highs, there are signs that the housing market is becoming more favorable for buyers in certain areas. But how can you tell if the housing market is becoming buyer-friendly? We’ll help you out!
According to the National Association of Realtors (NAR), the median price for an existing single-family home in the U.S. hit a new peak at $426,900 in June. Due to that, home sales decreased by 5.4% from May, totaling around 3.89 million units sold.
Although mortgage rates went slightly down from their May highs, the costs still remain expensive. The average 30-year fixed mortgage rate increased to 6.78% from 6.77%, based on data from Freddie Mac via the Federal Reserve.
However, experts suggest the market is shifting from a seller’s market, though it hasn’t fully transitioned, to a buyer’s market yet. A typical sign of a buyer’s market is having more than four months of supply, according to Chen Zhao, the economic research lead at Redfin, an online real estate brokerage firm.
“We’re still nationwide somewhat in a seller’s market, not a buyer’s market yet. However there’s good news for buyers on the horizon”, said Orphe Divounguy, a senior economist at Zillow.
How To Tell If The Housing Market Is Buyer-Friendly
Despite ongoing affordability challenges, those able to buy are noticing slight improvements. Here are four indicators that the market may be becoming more balanced:
Homes Staying on the Market Longer
Homes are taking longer to sell, giving buyers a better chance to negotiate prices. In June, about 64.7% of homes had been on the market for at least 30 days, which is more than the 59.6% a year earlier, according to Redfin. Zillow data shows that homes are now on the market for an average of 46 days, compared to 35 days last year and 19 days in 2021.
Increase in Canceled Purchase Agreements
Some buyers are reconsidering their decisions, even after reaching the closing stage. In June, around 56,000 home-purchase agreements were canceled, possibly due to buyers reassessing their budgets and requirements.
“Buyers are getting more and more selective. They’re backing to due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list”, said Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, in the Redfin report.
Increased Competition Among Sellers
With more homes available, buyers have more choices. According to NAR, the total housing inventory at the end of June was 1.32 million units, a 3.1% increase from May and a 23.4% increase from the previous year. This brings the supply of unsold homes to 4.1 months, up from 3.7 months in May and 3.1 months a year ago. Competition is easing fastest in the South, according to Zillow’s June 2024 Housing Market Report.
“With more inventory, that does certainly mean that buyers have more options, but that is very regional. And the ones with the most increases in inventories, they’re struggling with other issues”, said Selma Hepp, chief economist at CoreLogic.
Price Reductions by Sellers
Sellers are increasingly lowering their prices to attract buyers. In June, about one in five (19.8%) of homes had price reductions, which is the highest percentage for any June on record, according to Redfin. Home builders are also reducing prices, with 31% of them offering discounts to boost sales.
“We see one in four sellers are cutting their prices – the most for any June in the last six years – to try to sway buyers”, said Divounguy.
What Is The Least Competitive Housing Market For Buyers?
Certain areas in the U.S. have been identified as the least challenging places to buy a home, according to a new real estate index. The NBC News Home Buyer Index ranked areas that have the least difficult market. The following counties were identified as the least challenging in the index’s four key factors:
- Cost: Iroquois County, Illinois;
- Competition: Somervell County, Texas;
- Scarcity: Imperial County, California;
- Economic Instability: Macon County, Tennessee.
Cost is the most significant factor, considering household incomes, inflation, and additional expenses like insurance. Competition measures the demand for homes in a given area, while scarcity examines the availability of homes for sale and the expected new listings in the near future. Lastly, economic instability takes into account market volatility, unemployment rates, and interest rates.