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- The median home-sale price fell 1.2% year-over-year in March to $352,750, according to Redfin.
- As home prices fall and buyer demand fades, sellers are losing their grip on the housing market.
- On the whole, conditions are starting to improve for prospective home buyers.
This year's home buyers still have to dig deep to afford the typical home for sale in the US. With the median home-sale price at $352,750 and mortgage rates hovering above 6%, housing affordability is at an all-time low.
But that doesn't mean prospective buyers have to throw in the towel. There are more homes available for sale, and many home sellers are taking additional and unusual steps to sell their properties. In short, housing market dynamics are shifting, giving some buyers a better shot at achieving homeownership.
This is what the average home for sale in the US looks like today.
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After a couple of years of rapid price growth, US home prices are slowly but surely coming back to earth as higher mortgage rates dampen buyer demand.
With fewer Americans interested in home buying and mortgage rates hovering above 6%, the median home-sale price dipped 1.2% year-over-year in early March to $352,750, according to real estate brokerage Redfin.
Home price declines have been the sharpest in some of the priciest markets throughout the Western US, like San Francisco, Portland, Oregon, and Las Vegas.
"Price declines are more pronounced in the Western US with every major market in the West seeing prices pull back by 6% or more through December on a seasonally-adjusted basis," Black Knight researchers wrote in a February housing report.
Still, it may be a while before those metros feel truly affordable. While San Francisco's median home-sale price fell 11.2% year-over-year in February, the typical home sold there still cost a staggering $1,322,500.
In the metro, that price can get the typical buyer a 2-bedroom, 2-bathroom home. In a cheaper market like Chicago — where the median home-sale price is $315,000 — that same buyer could purchase a 5-bedroom, 3.5-bathroom home and still have some cash left over.
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US housing affordability hit a record low in February, according to the National Association of Home Builders. With home prices cooling, that leaves today's lofty mortgage interest rates as perhaps the biggest influence on the average American's ability to buy.
Higher mortgage rates have added hundreds of dollars to the typical buyer's home cost, offsetting any advantage that may have been gained as a result of declining prices.
It's a scenario that worsened in February as mortgage rates crept back towards 7% — an unwelcome development at a time when Americans have been seeing wage growth slow. But mortgage rates reversed course in mid-March amid speculation the Federal Reserve may slow or stop its interest rate hikes.
The pullback in rates has enticed some buyers back to the market.
"Both home-purchase and refinance activity saw gains last week but remain below year-ago levels," Bob Broeksmit, president of the Mortgage Bankers Association, said in a statement about a mortgage applications report. "Anticipated further rate declines may spur additional application gains as the spring home buying season begins."
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The combination of still-high home prices and high mortgage rates has been a toxic one to the US housing market.
But there's a silver lining to the housing slowdown: Prospective buyers now have more properties to choose from because homes are taking a longer time to sell.
Indeed, data from Redfin shows that homes remained on the market during late February and early March for a median of 48 days — an increase from 29 days during the same time period in 2022.
The result has been fewer bidding wars and more price cuts, especially in popular pandemic boomtowns like Austin, Texas, and Phoenix where home values ballooned over the last three years.
According to Redfin, Austin's home prices fell 4.9% year over year in February and homes spent 53 more days on the market than they did a year earlier.
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Sales of previously owned homes fell for the 12th consecutive month in January as higher housing costs deterred many would-be buyers.
With fewer buyers in the market, home sellers are getting desperate. In fact, many homeowners are offering concessions — like paying for home repairs or buying down mortgage rates for prospective buyers — in the hopes they will purchase their homes.
Redfin's data shows that home sellers made concessions in 45.5% of the home sales recorded by the company's agents in the three months through February. Not only is this up from 31.1% for the same period a year ago, it's the highest share for any three-month period that Redfin has recorded.
"If a seller is only getting one offer, it is the buyer who has the power to negotiate – the seller can't just go on to the next offer, " Daryl Fairweather, Redfin's chief economist, told Insider. The dilemma has given buyers more purchasing power this year, she said.