53.9% of properties sold below the original asking price, and 34.1% of sellers reduced the price on their homes for sale. Inventory continues its march to a level we have not seen in over a decade, hitting 9,597 homes for sale last week. At this pace, we might see an inventory of 12,000 homes by the end of September.
The average sold price is volatile, but gently declining and will most likely continue to do so through year-end.
Interest Rates
But even a slight adjustment of mortgage interest rates has spurred buyer activity in a shocking way. The question is, will buyer activity translate to more contracts and sold properties?
Mortgage rates have dropped by about .5% since the beginning of May, ending last week at about 6.5% on a 30-year fixed conventional loan, 5.99% on a VA and 5.75% on FHA. And correlate to this mortgage rate decline, buyer activity has jumped.
Showings
Last week saw home showings hit a shocking level at 26,941 showings, more than the same week in even 2021, the craziest real estate market in the history of the United States.
But sellers aren’t feeling the impact and there are two reasons why.
First, there are simply more homes to choose from compared to the last few years. While there are a lot more buyers out there, the number of showings is spread across more homes so we get a showings per listing, per week at the historically low number of 2.97.
Adding .5 showings per week from this year’s low doesn’t feel like much of a difference to a seller.
Sellers need to understand that buyer activity is definitely up, but it has not yet translated to demand or aggressive purchase action.
And, I don’t think we will see the return of aggressive purchase action this year. Rates may continue to fall, but buyers have more homes to choose from than they’ve had in a very long time and simply appear to be in no rush to make decisions.
The second reason sellers are not feeling the impact of increased buyer activity and furthering the notion of buyer patience is the number of showings it takes to get a property under contract.
Last week saw a seasonally high number of showings to get a property under contract, ending the week at 22.85 showings. The simple math, if you are getting 3 showings per week and it takes 23 showings to get a contract, it’s taking almost two months for the average property to go under contract.
And if we needed even more evidence of buyer patience, look no further than the number of properties going under contract. At 963 properties under contract last week we are right at the average of 2022 and 2023 which ended the week at 1,009 and 866, respectively.
But at 26,941 showings last week compared to just 17,500 in each of 2022 and 2023, buyer activity is simply not translating to the market velocity consumers are used to of the last 4 years.
It is time for us all to adjust to this new normal market and stop complaining about how hard it is. This is what real estate has been for a very long time. We just got spoiled for a while.
Two Notes in Working with Sellers
Make sure to analyze the number of showings for the price point and geography of your listings. Some areas are simply hotter than others. Remember, this is the return of hyper-local real estate.
Remind your sellers that if you are beyond the averages of days on market and total showings per contract, there are only 3 options:
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Adding .5 showings per week from this year’s low doesn’t feel like much of a difference to a seller.
Sellers need to understand that buyer activity is definitely up, but it has not yet translated to demand or aggressive purchase action.
And, I don’t think we will see the return of aggressive purchase action this year. Rates may continue to fall, but buyers have more homes to choose from than they’ve had in a very long time and simply appear to be in no rush to make decisions.
The second reason sellers are not feeling the impact of increased buyer activity and furthering the notion of buyer patience is the number of showings it takes to get a property under contract.
Last week saw a seasonally high number of showings to get a property under contract, ending the week at 22.85 showings. The simple math, if you are getting 3 showings per week and it takes 23 showings to get a contract, it’s taking almost two months for the average property to go under contract.
