The median home price in the U.S. has hit a record high of nearly $400,000, but real estate firm Redfin Corporation (RDFN) says price growth may be stalling.
In a recent note, Redfin highlighted that median home prices rose 4.7% year over year, the biggest increase in more than four months.
The rise in home prices comes as mortgage rates have fallen from highs recorded in October 2023. In addition to lower mortgage rates, a historically low inventory market has led to strong demand pushing up average home prices.
Despite falling mortgage rates, mortgage applications for homebuyers are down 13% from a year ago, suggesting that soaring home prices may be deterring would-be buyers. In fact, more homes are selling for less than their original asking price than at the highest level in four years.
“There are signs that price growth may soon lose momentum,” the report said. “The typical home sold for 0.4% less than the asking price, marking the first time since 2020 that the typical home sold for below list price in early July.”
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Redfin also noted that inventory is rising, which could signal a plateau in home price growth, and if the Federal Reserve were to cut interest rates, it could help homebuilders borrow money to build more homes, increasing supply and lowering home prices.
“While inventory is still historically low, it is up year over year, another sign that price growth momentum may be weakening in the coming months,” Redfin's note said. “New listings are up 7.3% year over year, and the total number of homes for sale is up 18.3%, with the majority of homes for sale continuing to sell slowly; over 60% of homes have been on the market for at least a month without going under contract.”
Price Trends: If home prices fall, it could reduce revenue for homebuilders such as KB Home KBH and Toll Brothers Inc TOL. But companies that rely on home sales, such as Zillow Group Z, could see increased business if lower prices bring new buyers into the market.
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