Housing Market Shows Signs of Improvement For Buyers
The housing market is showing promising signs for buyers, despite some lingering economic concerns.
On the bright side, home price growth has slowed, and mortgage rates have retreated from their recent peaks. According to Redfin, a real estate brokerage firm, the median sale price for homes was $375,475 in the four weeks ending February 16, marking a 3.7% increase from the previous year. This is the smallest increase in nearly five months, offering a glimmer of hope for potential buyers.
Moreover, the average 30-year fixed-rate mortgage rate dipped to 6.87% the week ending February 13, according to Freddie Mac data. This is the lowest rate so far this year and a decline from the recent peak of 7.04% in January.
While buyers still face significant affordability challenges, as noted by Orphe Divounguy, a senior economist at Zillow, there are several positive developments in the market.
For instance, inventory is on the rise as more homeowners are listing their properties. This increase in options gives buyers more bargaining power. Redfin data shows that there were 564,642 new home listings in January, a 1.9% increase from the previous month and a 4.7% increase from the same period last year. This is the highest level of new listings since July 2022.
Additionally, some home sellers are becoming more flexible with their asking prices. The typical home is now selling for 2% less than its asking price, the largest discount in two years, according to Redfin data.
However, economic uncertainty and job security concerns are causing some buyers to hesitate. As of mid-February, thousands of workers across multiple federal agencies and departments have been laid off as part of President Trump’s efforts to reduce the government workforce. This can make individuals who work directly with the government or are connected through contract work or federal funding nervous about potential changes.
“The first thing you might do is hold off on a really big purchase because you’re worried about financial security,” explained Chen Zhao, an economist at Redfin. The anxiety extends to broader economic factors, such as the possibility of trade wars and changes in government spending, which may leave Americans wondering about the future.
Despite these concerns, there are strategies to navigate the current market. If you’ve been looking for a while and find a house you love, try to negotiate hard on the price, Zhao suggests. If the seller is not willing to lower the asking price, see if they can cover additional expenses like closing costs or pay for the buyer’s real estate agent fees. These can be valuable concessions, as closing costs can range from 2% to 6% of the loan amount. For a $300,000 mortgage, this could mean paying between $6,000 and $18,000 in closing costs on top of the down payment.
Another option is to explore the new builds market, where some builders are offering incentives such as in-house lending and favorable loan terms, including lower rates. The average buyer’s agent commission was 2.37% for homes sold in the fourth quarter of 2024, down from 2.45% a year prior, according to a data analysis by Redfin.
In summary, while the housing market presents some challenges, there are also opportunities for savvy buyers to find great deals and negotiate favorable terms.
If you’re considering buying or selling, don’t hesitate to reach out to me with all your real estate needs or questions!
