Sunday, June 23, 2024

US Homes Are Selling Above Their Listing Price as Competition for Housing Soars

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More than almost 50 percent of homes sold in the United States in March were above the initial listing price, in 20 of the nation’s top 50 metropolitan regions, according to residential real estate search group, OJO Labs, on April 19.

Rising interest rates and a nationwide housing shortage are causing selling prices and mortgage rates to skyrocket in the highest level in a decade, with no signs of slowing.

With a shortage of homes comes more competition, as the U.S. spring selling season begins and mortgage rates tick up rapidly.

Increasing demand over the past two years among homebuyers has been met with a shortage of some 5.8 million homes, according to Realtor.com.

According to the OJO report, competition increased on a month-to-month basis in 49 of the nation’s top 50 metros in terms of homes sold last month, with only Buffalo, New York, witnessing a decrease.

Overall, 46 percent of homes were sold above list price in March, the highest percentage since August 2021, larger than the increase from the same month a year ago, when 36.2 percent of homes sold above their list price.

This was a solid increase from February, with only 40 percent of homes selling above list price.

Homes in March sold for an average of $9,687 above list price across the booming metro areas, while the revised data for February 2021 showed homes selling on average $3,857 above the list price.

Realtor.com’s latest Monthly Housing Trends Report said the national median home price hit another record high of $405,000, up 13.5 percent from the year before.

The median home price in March was up 26.5 percent, higher than at the start of the coronavirus pandemic in early 2020.

“Buyer demand is moderating in the face of high costs, and we’re beginning to see more homeowners take price cuts on their listings and overall inventory declines lessen in response,” said Realtor.com’s chief economist, Danielle Hale in a statement.

“Assuming all these factors and new construction hold steady, we could begin to see inventory increases this summer—welcome news for buyers who have endured pandemic home shopping and can continue their journey despite higher buying costs. For buyers currently in the market, there’s good reason to aim to find a home before interest rates increase further. But if it takes longer than a few months, don’t give up hope, as there may be more to choose from in the summer months,” she continued.

The Federal Reserve, meanwhile, is fighting rising levels of inflation by hiking interest rates and by reducing its bond portfolio and mortgage-backed securities, but the move has caused mortgage rates to rise dramatically.

Rising interest rates have been reducing buyer demand, while the short supply of saleable homes suggests that competition will likely remain elevated.

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Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.

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