A Record Share of Home Sellers Drop Prices as High Rates Cut into Buyers’ Budgets

Nearly 7% of for-sale homes posted a price drop during the four weeks ending October 29, on average, the highest portion on record. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

The record comes as mortgage rates hover at elevated levels, hitting their highest level in 23 years last week and cutting deep into buyers’ budgets. High rates have forced some sellers to lower their asking price to make up for high interest rates on monthly payments. It’s worth noting that buyers are getting a bit of relief this week, at least temporarily: Economic events sent daily average mortgage rates from 8% down to 7.5% over the last week.

Sale prices are still up 3% from a year ago. That’s partly because sale-price data is a lagging indicator, reflecting deals that went under contract a month or two ago. Growth in sale prices may slow in the coming months as it starts to reflect sales that went under contract as mortgage rates hit 8% in October.

Another reason for rising sale prices is that despite slow demand, low inventory is propping up prices. The total number of homes for sale is down 10% year over year; new listings are up 1% from a year ago—just the second increase since July 2022—but that’s partly due to new listings falling quickly at this time last year. Price drops becoming more prevalent than ever while prices continue increasing illustrates today’s bizarre housing market. Redfin agents describe a mismatch between sellers’ high expectations and the reality of buyers’ budgets, saying it’s more important than ever for sellers to price fairly from the start to attract buyers and sell quickly.

“Some sellers are pricing too high because they have FOMO after their neighbor’s house sold well over asking price two years ago,” said Seattle Redfin Premier agent Patrick Beringer. “While low inventory is driving some competition and relatively affordable homes in popular neighborhoods are still selling fast, they’re getting two or three offers as opposed to 20 offers at the height of the market. With mortgage rates in the 7.5% to 8% range, buyers simply don’t have the budget they would have had two years ago or even one year ago.”

In the Seattle metro, for instance, the typical homebuyer’s monthly mortgage payment is $232 more than it would have been a year ago. It’s nearly $2,000 more than it would have been two years ago.

Leading indicators

Indicators of homebuying demand and activity
	Value (if applicable)	Recent change	Year-over-year change	Source
Daily average 30-year fixed mortgage rate	7.51% (Nov. 2)	Down from 7.9% a week earlier	Up from 7.09%	Mortgage News Daily
Weekly average 30-year fixed mortgage rate	7.76% (week ending Nov. 2)	Down slightly from 7.79% a week ago; still near highest level in 23 years	Up from 7.08%	Freddie Mac
Mortgage-purchase applications (seasonally adjusted)		Down 1% from a week earlier (as of week ending Oct. 27)	Down 22% to its lowest level in nearly 30 years	Mortgage Bankers Association
Redfin Homebuyer Demand Index (seasonally adjusted)		Down 6% from a month earlier (as of the week ending Oct. 29)	Down 1%	Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents
Google searches for “home for sale”		Down 6% from a month earlier (as of Oct. 28)	Down 12%	Google Trends
Touring activity	Down 16% from the start of the year		At this time last year, it was down 27% from the start of 2022	ShowingTime, a home touring technology company

Key housing-market data

U.S. highlights: Four weeks ending October 29, 2023 Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.
	Four weeks ending October 29, 2023	Year-over-year change	Notes
Median sale price	$369,613	3.4%	Prices are up partly because elevated mortgage rates were hampering prices during this time last year
Median asking price	$383,200	5.4%	Biggest increase in a year
Median monthly mortgage payment	$2,757 at a 7.76% mortgage rate	12%	$16 shy of all-time high set a week earlier
Pending sales	68,693	-8.8%
New listings	79,906	1.1%	Second year-over-year increase since July 2022; the first was a week earlier. The increase is partly because new listings were falling at this time last year.
Active listings	858,570	-10.2%	Smallest decline since July
Months of supply	3.7 months	+0.3 pts.	Highest level since February 4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions.
Share of homes off market in two weeks	37.7%	Up from 34%
Median days on market	33	-2 days
Share of homes sold above list price	29.4%	Up from 28%
Share of homes with a price drop	6.9%	+0.2 pts.	Record high
Average sale-to-list price ratio	99.1%	+0.4 pts.

Metro-level highlights: Four weeks ending October 29, 2023 Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.
	Metros with biggest year-over-year increases	Metros with biggest year-over-year decreases	Notes
Median sale price	Newark, NJ (14.8%) San Jose, CA (13.6) Anaheim, CA (11.5%) West Palm Beach, FL (10.6%) Columbus, OH (10.3%)	Austin, TX (-6%) Fort Worth, TX (-3%) Tampa, FL (-1.8%) Portland, OR (-1.2%) San Antonio, TX (-1.1%)	Declined in 5 metros
Pending sales	Austin, TX (2%) Tampa, FL (1.3%) Las Vegas (0.2%)	Portland, OR (-23.5%) Sacramento, CA (-21.6%) San Antonio, TX (-21.6%) Seattle (-18.1%) Newark, NJ (-16.4%)	Declined in all but 3 metros
New listings	Phoenix (13.9%) San Jose, CA (12.7%) Miami (12.1%) Tampa, FL (10.7%) West Palm Beach, FL (10.6%)	Atlanta (-22.5%) Portland, OR (-14.7%) Seattle (-12%) Nashville, TN (-10.2%) San Antonio, TX (-9.8%)	Increased in 16 metros