How Much Are Mortgage Rates Affecting Home Prices?
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Here's your money briefing for Monday, August 8th. I'm J.R. Whalen for The Wall Street Journal. The average 30-year fixed mortgage rate dipped to 4.99% last week. That's lower than the recent high reached in June, but it's still about two percentage points higher than a year ago. And that steady climb has shifted some of the balance of power to home buyers and caused many sellers to change their game plan.
Some people are actually coming to the place where, you know, they're just happy to get any offers on their home. So, you know, as more homeowners are cutting their prices, they're having to make difficult decisions all at once.
But it's not as simple as just cutting the price. Our personal finance reporter Veronica Dagger checked in with real estate experts who say there are lots of factors sellers need to keep in mind if they want to get the best price. We'll find out what they are after the break.
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How did recent mortgage rate changes set the scene for this housing market update?
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For the past two years, many home sellers capitalized on low mortgage rates, which brought buyers out in droves. It was common for a seller to get more than they even asked for. But for some home buyers who waited to sell, rising interest rates in just the past few months have left them worried that they waited too long. Making a sale is no longer as easy as just posting a listing. WSJ personal finance reporter Veronica Dagger has been doing some research on the housing market, and she joins us with more. Hey, Veronica, thanks for being with us.
Thanks for having me, JR.
So, you know, Veronica, the changing economy and mortgage rates that have trended higher since the start of the year, they sort of chipped away at the market that has benefited sellers for much of the past two years. How is that affecting home prices?
So prices overall are rising. They're expected to continue to rise overall, that's sort of nationally. But we are seeing these increased pockets of weakness, especially if your home has been on the market for a while. We have this statistic that shows homes that have been on the market for three months or longer are reducing their prices by about 11% from the list price. We're also seeing that one in seven homes on the market had a price reduction in June, according to Realtor.com. And that's nearly double the rate of one in 13 homes a year ago. So it's still a seller's market, but that is pretty quickly starting to shift.
Now, in the first part of this year, as well as last year, we heard stories about home sellers getting multiple offers, many even getting above their asking price. What are sellers experiencing now and how have they had to change their game plan?
Yeah, so those bidding wars that you heard about, those offers over ask that you just mentioned, yeah, that's kind of a thing of the past right now.
How have higher mortgage rates shifted bargaining power from sellers to buyers?
That's not really happening for a lot of sellers in many markets. And so these homeowners are having to come to grips with the reality that they may not get the same price that their neighbor did just a few months ago.
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