Home prices are slipping, but buyers still face a catch

When I purchased my first home a few years ago, I quickly realized that the sticker price was only a starting point. In a fiercely competitive market, houses often sold for far above the asking price.

I personally paid tens of thousands of dollars more than the listed amount for my home.

That kind of experience was common during the housing boom of the 2020s. But Redfin data shows that after three straight years of increases, home-sale prices have now fallen for three weeks in a row.

“The median home-sale price in America almost never declines,” Corey Burr, senior vice president at TTR Sotheby’s International Realty, told me. “Over the past 75 years, there have been 5-7 years when prices have declined year-over-year.”

Home-sale prices are down 0.4% from a year earlier

The median home-sale price slipped to $388,604 in the four-week period ending Nov. 1, according to the Redfin Housing Market Tracker. That marked a 0.4% decline from a year earlier.

Prices have now edged lower for three straight weeks, and the most recent drop was the largest year-over-year decrease so far. The period ending Oct. 25 showed a 0.1% decline, while the one ending Oct. 18 showed a 0.2% decline.

Those declines, along with lower mortgage rates, have pushed the median monthly mortgage payment to a five-week low. It now stands at $2,777, down from a peak of $2,811 in early October.

National numbers, however, don’t capture the full picture. Home-sale prices can differ sharply from one location to another. Some metro areas are still seeing gains, while others are posting much steeper drops than the national median.

The metro areas with the biggest home-sale price declines this week were Fort Lauderdale, Fla. (-5.9%), Austin, Texas (-5.8%), and Seattle (-5.1%).

Why some cities are seeing faster price declines

Falling home-sale prices may look like a win for would-be buyers, but they are really a sign of a market under pressure from affordability problems and softer demand.

“This is mostly a demand problem,” Redfin Chief Economist Daryl Fairweather told me. “Pending sales are at their lowest level in at least five years because buyers are stretched by mortgage rates and prices that haven’t come down enough.”

In short, many people are not buying homes largely because they cannot afford them, and that weaker demand is pulling prices down.

I asked Fairweather what was behind the sharper declines in Fort Lauderdale, Austin, and Seattle.

“All three of these markets have roughly twice as many sellers as buyers right now,” she said. “In Austin and Fort Lauderdale, builders have added a lot of supply in recent years. Buyers have plenty of homes to choose from and can easily move on to the next option.”

She added that Seattle’s situation is different. Layoffs in the technology sector and broader uncertainty are likely causing many buyers to wait until they feel more financially secure.

There are many forces shaping the U.S. housing market, and unfortunately they do not all move in the same direction at once.

For buyers who can afford current mortgage rates and home prices, lower sale prices may open up some opportunities. In markets where prices are falling, buyers may have more room to negotiate and could end up paying less than they would have only a few months ago.