Recent Decline in Phoenix Home Prices
A recent report from Redfin (redfin.com), the technology-powered real estate brokerage, reveals that despite the current market conditions, home prices have remained relatively stable. In Phoenix and across the U.S., the typical home is selling for approximately $383,000, which is only a slight decrease of about $4,000 (-1%) from last year’s all-time high. This marks the smallest year-over-year drop in nearly four months. Furthermore, the sale-to-list price ratio has reached 100% for the second time since last August, indicating that homes are now selling for their asking price.
The stability in home prices can be attributed to the limited inventory available on the market. New listings have declined by 27% compared to the previous year, the largest drop seen since the start of the pandemic. As a result, the overall number of homes for sale has decreased by 11%, marking the first double-digit drop in over a year. Homeowners are choosing to stay put in order to maintain their current low mortgage rates, despite the average 30-year mortgage rate still hovering around 7%, which is more than double the record-low levels seen in 2021.
While the high mortgage rates have deterred some potential homebuyers, there are still more buyers than sellers in the market. Pending home sales have decreased by 15%, which is significantly less than the drop in new listings. This indicates that buyers are quickly purchasing available homes, leading to elevated home prices.
According to Andrea Chopp, a Redfin Premier agent in Oakland, CA, the current real estate market lies between the fast-paced market seen 18 months ago, and the slower market experienced six or seven months ago when mortgage rates initially increased. Buyers should be aware that desirable homes are receiving multiple offers and selling above the asking price. On the other hand, sellers should understand that their home may not attract as much competition as it would have two years ago, but with fair pricing and effective marketing strategies, it will sell. Factors such as making small repairs and staging remain important in the selling process.
The average 30-year fixed mortgage rate on June 28 was 6.91%, marking a decline from the previous month’s high of 7.14%. In the week ending June 22, the average rate slightly dropped to 6.67%, following an eight-month high of 6.79% at the beginning of the month.
Here are the key highlights:
- Mortgage-purchase applications rose by 3% during the week ending June 23 (seasonally adjusted), compared to the previous week. However, they were down by 21% from the previous year.
- The Redfin Homebuyer Demand Index, which measures the demand for home tours and other homebuying services from Redfin agents, reached its second-highest level since May 2022 during the week ending June 25. It showed a 10% increase compared to the previous year, marking the fifth consecutive annual growth. In contrast, demand was declining at the same period in 2022 due to rising mortgage rates.
- Google searches for “homes for sale” witnessed an increase of 5% compared to the previous month during the week ending June 24. However, they were down approximately 9% from the previous year.
- According to home tour technology company ShowingTime, touring activity as of June 21 was up 9% from the beginning of the year, in comparison to a 6% decrease during the same time last year. This increase in tours contrasts with the slow growth observed last year when mortgage rates were surging.