US homes selling above asking price as inventory remains limited
New listings fell nearly 25% year over year, one of biggest declines since May 2020
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For the first time in nearly a year, the average U.S. home is selling for more than its asking price due to a lack of inventory.
According to the latest data from real estate firm Redfin, the sale-to-list ratio hit 100.1% on average during the four weeks ending July 2. The average sale-to-list price ratio hasn't surpassed 100% since last August.
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This comes at a time when prices are still elevated. The median home-sale price only fell 0.3% from a year ago, when prices were near record highs, Redfin reported.
"Sellers that do list have a bit more pricing power and are increasing asking prices," Redfin deputy chief economist Taylor Marr told FOX Business, adding that new listings per square foot have been rebounding, rising nearly 3% from last year for the four weeks ending July 2.
"However, some of these homes may end up having to drop their price if they list too aggressively while mortgage rates are over 7%," Marr cautioned.
The lack of active inventory is what's prompting buyers to bid over asking, the company reported. For instance, the number of new listings of homes for sale fell 24.7% year over year, marking one of the biggest declines since May 2020.
A "For Sale" sign outside a home in Atlanta, Georgia, on Friday, Feb. 17, 2023. (Dustin Chambers/Bloomberg via Getty Images / Getty Images)
Overall, the number of homes for sale dropped 11.6% from a year earlier as homeowners stay out of the market in fear of losing out on a relatively lower mortgage rate. This decline was the biggest drop since April 2022, the data showed.
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The number of active listings was flat on a monthly basis, which isn't typical for this time of year. Normally, there is a month-over-month increases in active listings.
A home for sale in Fort Washington, Pa. (AP Photo/Matt Rourke, File / AP Newsroom)
Even with low inventory and higher prices, Redfin reported that "early-stage homebuyer demand is picking up."
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The real estate brokerage's Homebuyer Demand Index, which measures the number of requests for home tours and other buying services from Redfin agents, is up 4% from a month earlier. It's also sitting around its highest level in over a year, Redfin reported.