Published by FOX Business | May 31, 2022
The rise in mortgage rates is pricing out buyers
Price drops are “becoming increasingly common” in some of the most popular housing markets across the United States.
According to new Redfin data, more than 20% of home sellers dropped their price in seven of the 10 most popular migration destinations last month: Cape Coral, Florida; Sacramento, California; North Port, Florida; Tampa, Florida; Atlanta, Georgia; San Antonio, Texas, and Phoenix, Arizona.
Although the price drops are becoming more common, they are the result of rising mortgage rates, which is pricing out buyers and driving down demand.
“When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices, but at 5%, many are now priced out. A home’s price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly.”
–Daryl Fairweather, Redfin chief economist
Areas that saw a huge surge in migration and sharp increases in home prices over the past two years are now seeing “an abrupt drop-off in demand,” which is forcing sellers to “drop their prices with increasing frequency,” Fairweather said.
