Price Drops Help Drive Home Sales Surge

SEATTLE—Homebuyers who have been willing to wait for better deals will be rewarded for their patience, as sellers drop listing prices to meet buyers' more value-focused expectations, according to the latest Housing Market Tracker from Redfin. In the report, Redfin chief economist Nela Richardson explains that a slowdown in home price growth and a shift in pricing power from sellers to a more balanced market combined to cause this change in housing activity as the market transitions from summer to the fall buying season.

For the first time in five months, price growth was flat in July across all 35 markets included in the report. That shift has been nearly nine months in the making from when sales began to first decline last November. As a result of this shift, the number of homes that sold above list price in July is down nearly 7% to 20.1% from 26.8% a year ago, the biggest drop of the year.

Redfin expects an unusual surge in home sales this fall and that prices will continue to flatten and potentially decline month over month in September or October. If that happens, it will be the first three-month price decline since fall 2012.

“Sellers are finally catching on that it's not a seller's market anymore,” says Jeremy Cunningham, a Redfin real estate agent in Virginia.

Redfin also sees strong evidence of buyer demand heading into fall. The number of tours and offers across Redfin markets continued to accelerate from July and into August, and mortgage rates continue to hover at lows for the year. The selling season started late this year as part of a first quarter slowdown in the overall pace of economic growth. The carryover homebuyer demand and supply from earlier this year set the stage for a surge in sales over the next two months that will be stronger than any other in the past five years.