Fewer homes selling above asking price in the US as market slows
The number of homes sold in the United States over their asking prices fell to a two year low at the end of 2018, a new analysis shows.
Overall the share of sales that were over the listed price decreased from 21% in November to 19% in December, the largest month on month drop in seasonally adjusted data since at least 2012.
The analysis from real estate firm Zillow points out that the share has been declining steadily since its peak of 24% of homes sold above list price in May 2018 and the amount was down from $7,000 in 2017 to $6,830 in 2018.
Zillow says that it is another sign that the housing market is slowing and the downward trend in December was widespread with eight of the 10 largest markets in the US experiencing a drop from November levels.
Philadelphia and Washington D.C were the exceptions and among the largest 35 markets, 27 saw a downtick in the share of homes that sold above listed prices.
The largest drop was in Indianapolis, where homes selling above the asking price fell nearly 13%, followed by San Francisco down 5.4%. But San Francisco still saw the second highest share of homes sell above listed price in December at 42.6%, exceeded only by San Antonio at 44.3%.
‘Last year marked an inflection point in the housing market. The first half of 2018 looked a lot like the previous three years with sellers firmly in control of the market and buyers outbidding each other for scarce inventory, pushing up prices,’ said Zillow senior economist Aaron Terrazas.
‘But something shifted mid-summer. Sellers sitting on the side lines joined in, increasing inventory. The balance of power began to swing marginally back toward buyers, particularly in higher priced communities, during the second half of the year, a change after several years of frenzied activity,’ he explained.
‘With mortgage rates now back down, early data from the first month of 2019 suggest that it is still premature to call it a buyer’s market. But more than any time in recent memory, it is important for sellers to be thoughtful in their listing strategy. Buyers are out there, but they’re no longer fighting each other tooth and nail to get in the door,’ he added.
The San Francisco Bay Area and Silicon Valley remained the hottest housing region in the country in 2018. Among top 35 markets, San Jose at 64.1% and San Francisco at 61.6% had the highest share of home sales above asking price despite a steady slowdown since the start of last year.
These two markets combine to fill the top 10 lists for share of homes sold above asking and median price above asking since Zillow began tracking this data in 2012. This includes a record $101,000 median price above asking in San Jose in 2018, shattering the previous record of $70,000 set in San Jose in 2017.
In Miami 9.7% of homes sold above the asking price, in Tampa Bay it was 14.5% and in Pittsburgh 15.2%, making them the 2018’s coolest top 35 markets. Nearly 84% of homes in Miami sold for below their asking price.