A townhouse for sale in the Upper East Side neighborhood of New York City.
Adam Jeffery | CNBC
Part of the heat is coming from home prices, although they are still higher than a year ago.
Several new reports show price increases are slowing and home sellers are starting to relent after a stagnant spring market.
For the first time since the start of the Covid-19 pandemic, when home sales ground to a halt, the typical home sold for slightly less than its asking price — down 0.3% — during the four weeks ending June 23, according to real estate agency Redfin. A year ago, at that time, the typical home sold at list price. Two years ago, it sold for about 2% above list price.
That doesn't mean the real estate market is collapsing. Just under two-thirds of homes sold above asking price in the last month; however, this is the lowest percentage since June 2020. While most sellers continue to offer their homes at higher prices than comparable homes sold a year ago, some admit they simply cannot achieve those prices.
Mortgage rates remain stubbornly high, with the average 30-year fixed mortgage rate stuck just above 7% for the third straight month, according to Mortgage News Daily.
The closely watched S&P Case-Shiller index showed April home prices up 6.3% from April 2023. May prices continue that trend. Home prices are now 47% higher than at the start of 2020, and the median sales price is now five times the median household income.
CNBC got an exclusive early look at home price data due out next week from a different index from ICE Mortgage Technology. It shows annual home price growth fell to 4.6% in May from 5.3% in April. That's the slowest growth rate in seven months.
Supply is starting to pick up, causing prices to cool. According to Realtor.com, the total number of active listings is now 35% higher than it was this time a year ago. To put that in perspective, though, even after recent growth, inventory is still 30% below typical pre-pandemic levels.
“Some buyers believe they can get a good deal because they hear the market is calm, and some sellers believe every home will sell for top dollar regardless of condition,” Marije Kruythoff, a Redfin agent in Los Angeles, said in a statement. “In reality, it all depends on the home and the location.”
