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What Does The Growing Gap Mean for Buyers?<\/p>\nSellers now outnumber homebuyers by a record 63 percent as those discouraged by rising mortgage rates and lingering economic fears have backed off the market, according to the latest data.<\/p>\n
The buyer count last month fell to its lowest level since real estate brokerage Redfin started tracking data in 2013, down to about 928,892. That number was down 2.4 percent from the month before. At the same time, sellers hit their highest level since March 2020, when a pandemic homebuying frenzy triggered by historically low borrowing costs took over the country. <\/p>\n
According to Redfin, there were over 1.5 million sellers in the U.S. housing market in September across all residential property types, up 1.2 percent month-over-month.<\/p>\n
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The gap last month was the largest since the post-recession housing crash\u2014revealing how difficult the market has gotten for U.S. homebuyers since the pandemic. Americans, however, are in better homebuying shape than during the crash in 2008.<\/p>\n
The data also show that pandemic hangover is not all that is affecting the market. The surplus of sellers increased toward the end of summer as mortgage rates started climbing and inflation rose, fueled by higher gasoline and diesel prices. In August, sellers outnumbered buyers by 56.9 percent, which means that the gap grew by nearly 6 percent in just one month.<\/p>\n<\/p>\n
Why Buyers Are Retreating?<\/p>\n
At the end of last year, housing experts and economists expected lower mortgage rates through 2026 to improve housing affordability for Americans. Until late February, mortgage rates were slowly declining. <\/p>\n
Before the U.S. and Israel launched joint strikes in Iran at the end of February, the average 30-year fixed-rate mortgage\u2014the most popular form of home loan among American borrowers\u2014reached 5.98 percent, according to Freddie Mac.<\/p>\n
But fears of economic instability and rising inflation in the U.S., driven by disruption to the global oil market, have caused mortgage rates to reverse course and start climbing back. The Federal Reserve’s decision last month to raise interest rates for the first time in three years\u2014which was largely anticipated by the markets\u2014further pushed up mortgage rates.<\/p>\n
As of the week ending October 8, the 30-year fixed-rate mortgage averaged 7.4 percent, up from 6.30 percent a year earlier.<\/p>\n
What Does The Growing Gap Mean for Buyers?<\/p>\n
For the few buyers willing to enter the market now, things could be looking up.<\/p>\n
Forty-one of the 50 most populous metropolitan areas in the nation are now technically \u201cbuyer\u2019s markets\u201d\u2014ones where buyers appear to have the upper hand over sellers and can negotiate better deals for themselves.<\/p>\n
Normally, Redfin defines a buyer\u2019s market as one where there are over 10 percent more sellers than buyers.<\/p>\n
But, only those who can afford to get into the market can benefit.<\/p>\n
\u201cThis is a buyer\u2019s market born out of caution, not strength,\u201d Asad Khan, a senior economist at Redfin, said in a statement.<\/p>\n
\u201cBuyers have tremendous negotiating power in most of the country because so many other would-be buyers have been priced out of the market, or scared off by economic uncertainty,\u201d he added. <\/p>\n
\u201cFor house hunters who have the budget and job security to purchase a home in today\u2019s market, that creates a unique opportunity: They can be picky, negotiate and even walk away if the deal doesn\u2019t make sense financially or they find something they like better. The irony is that in terms of supply, these are some of the best conditions for buyers in many years\u2013but they have arrived at a time when costs are so high that fewer people can afford to take advantage of them.\u201d<\/p>\n<\/p>\n
Where Do Buyers Have the Biggest Advantage?<\/p>\n
The biggest gap in the nation last month was in Miami, where buyers outnumbered sellers by 158.9 percent. Here, according to Redfin, 26.9 percent of for-sale homes cut prices last month. The median sale price was 4.8 percent higher than a year earlier, at $649,691.<\/p>\n
Nashville had the nation’s second-largest surplus, at 152.3 percent. Here, a larger share of homes on the market saw price cuts last month\u2014a total of 38.3 percent<\/a>\u2014and the median price of a home was down 1.1 percent year-over-year, at $464,779.<\/p>\n Next was Houston, with a 134.6 percent gap last month. In Houston, 35.8 percent<\/a> of homes had price cuts and the median price of the typical property was $341,837, down 2.3 percent from a year earlier.<\/p>\n<\/p>\n These three cities\u2014and the following 10 in the top 13 metros with the biggest surplus of sellers\u2014all have one thing in common: they are all in the Sun Belt. Four are in Texas and four in Florida\u2014the two states that have built more new housing since the pandemic.<\/p>\n In these two states and many of the metros in the top 13, demand for housing exploded between 2019 and 2022, spurring a wave of new construction. <\/p>\n But these new homes flooded the market after domestic migration had already slowed significantly, with many would-be movers forced to stay or return to the expensive metros in the West and Northeast by return-to-office orders. At the same time, many locals had been priced out of some markets by the rise in home values, exacerbated by rising property taxes, homeowner association fees and home insurance premiums.<\/p>\n As a result, inventory continues to trickle into these markets, piling up over older listings that are not finding interested buyers.<\/p>\n<\/p>\n The Nation\u2019s Last Seller Markets<\/p>\n Four metros\u2014Boston, Chicago and New Brunswick, New Jersey, and Providence, Rhode Island\u2014were considered balanced markets.<\/p>\n Five of the 50 most populous U.S. metros analyzed by Redfin were seller\u2019s markets. These included Nassau County, New York, which counted 28.6 percent fewer sellers than buyers; Montgomery County, Pennsylvania (-22.7 percent); Newark, New Jersey (-18.5 percent); Milwaukee (-16.1 percent) and San Francisco (-10.6 percent).<\/p>\n These all represent markets where limited homebuilding over the past few years has kept inventory tight in the face of steady demand.<\/p>\n San Francisco, according to Redfin, is an exception\u2014the city\u2019s housing market has exploded largely due to the AI boom, fueling home sales.<\/p>\n Contact Newsweek editors on this story: Matthew Robinson<\/a> and Geoffrey Rowland<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Sellers now outnumber homebuyers by a record 63 percent as those discouraged by rising mortgage rates and lingering…\n","protected":false},"author":2,"featured_media":883569,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101,2053,5456,15417,5412,3657],"class_list":["post-883568","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-housing","tag-housing-market","tag-maps","tag-mortgage-rates","tag-u-s-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/883568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=883568"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/883568\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/883569"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=883568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=883568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=883568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}