Autumn is historically the start of the slow season for home sales, but after a sluggish spring and summer, wrought with still-tight supply and higher costs, the stage may be set for a small rebound in U.S. housing this fall, at least according to a new report from Redfin, a real estate brokerage.
More sellers are lowering their price expectations, because the number of homes that sold above list price in July was down nearly 26 percent from a year ago, noted the Redfin report. That is the biggest drop of the year. Lower prices, still-low mortgage rates and increasing supply could push sales higher.
“We expect prices to continue to flatten in August, and potentially decline month over month in September or October. If that happens, it will be the first three-month price decline since the fall of 2012,” according to the Redfin report.
Twenty-seven percent of homes sold above their list price a year ago, compared with 20 percent this July. Redfin also reports that its agents are seeing more negotiation between buyers and sellers.
Home prices rose 7.4 percent nationally in July from a year ago, according to CoreLogic, but the gains have been shrinking steadily. That includes sales of distressed homes, which are slowly becoming a smaller share of the market. It is the 29th straight year-over-year gain in prices. Arkansas was the only state to see a price decline, while other states, like Texas, Colorado, Louisiana and the District of Columbia, reached new record price highs.
“While home prices have clearly moderated nationwide since the spring, the geographic drivers of price increases are shifting,” said Sam Khater, deputy chief economist at CoreLogic. “Entering this year, price increases were led by Western and Southern states, but over the last few months Northeastern and Midwestern states are migrating to the forefront of home price rankings.”
Home prices are still down nearly 12 percent nationally from the peak of the housing boom, but the recovery is becoming ever more local, especially as fall homebuyers enter the market. Traditionally, housing slows down in the fall. Home searches in September and October combined are 6 percent below the annual average, according to Trulia.
Fewer families are shopping for homes, as they don’t want to move during the school year. First-time homebuyers usually pick up the slack, but this particular cohort has had the most trouble re-entering the housing market since the recession.
While markets in Florida, Texas and Arizona slow in the fall, others in New England, California and New York heat up.
“Markets where search activity is high in autumn tend to have warm and dry Septembers and Octobers relative to their local climate in the rest of the year,” according to Trulia’s chief economist, Jed Kolko. “In the Bay Area and much of the West Coast, September and October typically continue to be warm and dry—which prolongs the house-hunting season. In San Francisco, in fact, September and October are the warmest months of the year.”
Winter resort markets of course heat up, while summer vacation destinations shut out the lights. Homebuyers looking for the best deals might consider shopping offseason—as in hitting the beach listings in the fall, when competition is less fierce. The only downside would be potentially fewer listings from which to choose.