The US housing market, which has been plagued by high prices and a lack of supply, is showing some signs of improvement for homebuyers. Inventory, which typically declines at this time of year, is actually growing, according to Altos Research. Additionally, more home sellers are lowering their asking prices, as reported by Redfin. While the housing market has been stagnant recently, these indicators suggest a glimmer of hope for prospective buyers.
Home construction continues to drive up supply, leading to an increase in housing inventory. Altos Research noted that inventory rose by 1.8% in the last week of September compared to the previous week, demonstrating how homebuyers are reacting to the highest mortgage rates in over two decades. Despite these positive signs, there is no indication of an imminent flood of inventory entering the market.
The hike in mortgage rates, which reached the highest level in 23 years, has contributed to the low supply, as homeowners who financed at lower rates are reluctant to sell. Rising prices and high rates have also caused home affordability to deteriorate. However, Altos Research reported that more homes on the market are taking price cuts from their original list price, indicating a potential decline in prices. Additionally, Redfin observed an increase in the percentage of home sellers dropping their asking prices.
As the market enters the fourth quarter, sellers may need to be open to further price reductions, considering the expected interest rate hike by the Federal Reserve. Buyers are becoming more demanding, expecting homes to meet their exact preferences or for the price to be negotiable. Builders are also adjusting to market conditions by offering smaller properties or rate buydowns. This newfound optimism in the housing market offers hope for prospective homebuyers who have struggled to enter the market.