The slowing price growth suggests we may not see a new peak for home prices in 2023.
Meanwhile, growth in housing supply continues to slow and inventory levels are declining in many metros as fewer sellers, compared to a year ago, are listing their homes, and as buyers compete for available listings—especially the more affordable ones.
April and May are historically popular months to buy, and typically by this time in the year we’ve exceeded the prior year’s peak home price. Weakening home price growth for the past 12 months is increasing the odds that we may not see a new home price peak this year, for the first time in the history of our listing data, which dates back to mid-2016, and this is likely welcome news to home shoppers. Despite stalling price growth, home listing prices are up slightly compared to last May, and with rates more than a percentage point higher than a year ago, buyers continue to face affordability headwinds. The good news for sellers is that buyers are still out there, and this month’s slower growth in the active inventory of homes for sale indicates that shoppers are in the market and actively searching for homes that fit their needs and budget.
Danielle Hale - Chief Economist for Realtor.com®
WHAT DOES THIS MEAN FOR BUYERS, SELLERS, AND THE U.S. HOUSING MARKET?
A recent report from Realtor.com® showed the first decline in down payments (the amount paid) since the second quarter of 2020, after peaking in Q2 2022. Buyers in today’s market are finding it more difficult to keep up with housing costs.
That said, a slowing market could mean less competition, making it easier for buyers to get an offer accepted while paying less up front.
A drop in competition could also bring about an increase in seller concessions as homeowners with a need to move will be more likely to offer these to expedite a sale.
As buyers’ budgets are being stretched to the max, there are opportunities for negotiation, especially on homes that have been sitting on the market for a while. They can ask sellers to come down on the price, make costly repairs, as well as contribute to their closing costs or buy down their mortgage rates. If they’re purchasing new construction, they can also request upgrades. This can add up to substantial savings. Clare Trapasso -
Realtor.com® Executive News Editor
HOME PRICE GROWTH FOR THE TYPICAL HOME SLOWS TO THE LOW SINGLE DIGITS
While home listing prices for May were slightly higher compared to May of 2022, growth in the typical listing price of for-sale homes continued trending downward into the low single digits.
Key home price metrics for May:
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The U.S. median list price rose to $441,00—up from $430,000 in April and down -1.7% from the record high of $449,000 reached in June 2022.
- The annual home price growth rate decelerated to +0.9% in May—down from 2.5% in April and falling to the lowest price growth in Realtor.com’s records dating back to 2016.
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Nationwide, the median listing price per square foot declined (-0.3%) compared to one year ago for the first time in RDC’s data history.
- At the current rate of slowing, asking prices are likely to fall year over year by next month.
Posted by:
Sarah Lentz
June 6, 2023
