The housing market is experiencing a significant shift, with more home sellers cutting their asking prices. According to a recent report by Redfin, 6.4% of home sellers nationwide reduced their asking price during the four weeks ending May 26. This marks the highest share since November 2022. Despite this, the median sale price continues to rise, reaching a new record high and thereby pricing out some potential buyers.
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Key highlights from the report include:
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  • Median Asking Price: Dropped by approximately $3,000 to $416,623 in the last week, the first decline in six months.
  • Supply Trends: The typical number of days active listings remain on the market has started rising year over year, hitting a median of 46 days.
  • Mortgage Rates: The average mortgage rate is now at 6.94%, dipping below 7% for the first time since early April.
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These trends suggest that the growth in sale prices could soften in the coming months, influenced by persistently high mortgage rates turning off homebuyers.
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Buyers Find Temporary Relief: A Brief Reprieve in Costs
The typical U.S. homebuyer’s monthly housing payment recently dropped to $2,812, its lowest level in six weeks. This decrease is attributed to a slight reduction in mortgage rates, which, despite high sale prices, have come down from their peak. However, this relief might be temporary as daily average rates have begun to increase again following disappointing treasury auctions.
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Current Market Challenges: Inventory and Demand Issues
High costs and low inventory continue to dampen demand. Pending sales have decreased by 3.4% year over year, and mortgage-purchase applications are near their lowest level in six months. Although there has been a 7.8% increase in new listings compared to last year, the momentum of listing growth has slowed down, limiting the options available to buyers.
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Buyer Strategies: Navigating a Competitive Market
Despite the challenges, well-maintained properties listed for under a million dollars are still attracting multiple offers. Buyers are advised to:
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  • Consider Single-Family Homes: Look for homes that are slightly outdated but do not require major renovations.
  • Explore Lesser-Known Neighborhoods: These homes may stay on the market longer, allowing buyers to avoid bidding wars.
  • Think About Condos: Many condos are currently going under the asking price and are less competitive.
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Market Indicators: A Closer Look
Several key indicators provide insight into homebuying demand and activity:
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  • Daily Average 30-Year Fixed Mortgage Rate: 7.34%, up from 6.99% two weeks earlier.
  • Weekly Average 30-Year Fixed Mortgage Rate: 6.94%, down from a five-month high of 7.22%.
  • Mortgage-Purchase Applications: Declined by 1% from the previous week.
  • Redfin Homebuyer Demand Index: Down 7% from a month earlier to the lowest level in three months.

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These indicators reflect the current state of the market, with both challenges and opportunities for buyers and sellers alike.
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A Positive Outlook for Small Builders and Remodelers
Despite the current market conditions, there is a silver lining for small business builders, remodelers, and trade companies. The need for housing remains strong, particularly for family-friendly homes. As the market adjusts, there will be opportunities for these businesses to thrive by focusing on:
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  • Renovation Projects: Offering services to update and improve older homes can attract buyers looking for move-in-ready properties.
  • Specialized Skills: Leveraging expertise in areas such as energy-efficient upgrades and smart home technology can set businesses apart.
  • Customer Education: Helping clients understand the benefits of less competitive housing options can lead to successful sales and satisfied customers.
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With strategic planning and a focus on emerging trends, small builders and remodelers can navigate the current market challenges and seize new opportunities.