Highest share since at least 2010
More homes for sale had a price drop last month, a sign of the continued cooling of the US housing market according to Redfin.
The brokerage began tracking price drops in 2010 and the 31.3% of homes that had at least one drop of more than 1% in October was the highest share it has seen. It was an increase of 6.3 percentage points from a year ago.
Prices were up 4.5% year-over-year to a median $297,200, slowing from the 6.5% recorded in September. This was despite October posting a 2.4% increase month-over-month, bucking the trend of the past 8 years where an average 1% decline has been recorded.
Redfin’s analysis shows that 32 of the largest 72 metros saw a price gain month-over-month in October suggesting a shift to more expensive areas rather than prices gains of individual properties.
The number of homes for sale was up 1.3% year-over-year, the highest level of inventory growth since September 2015 and driven by growth in softening coastal markets like San Jose (110.9%), Seattle (73.2%), San Diego (38.2%), and Boston (17.3%).
The number of homes newly listed in October rose 5.4% year-over-year, while home sales dropped 5.7% from 2017. Home sales declined in 59 of the 71 largest metro areas that Redfin tracks.
"An increase in interest rates effectively makes home-buying more expensive because buyers have to pay higher monthly mortgage payments even if the sticker price hasn't changed," said Redfin chief economist Daryl Fairweather. "Some homebuyers are adjusting their price range down, and others are backing out of home-buying entirely -- deciding that renting is a better deal. Sellers are now realizing buyer demand isn't what it used to be and are dropping their prices. When buyers and sellers are on the same page, the market moves quickly, but since sellers were slow to react, we've seen a slowdown in the housing market."
