Home sale prices posted their smallest annual gain since March 2012 and mortgage rates have declined, leaving bidders less inclined to race for a deal, according to Redfin. But at the same time, a cooler housing market suggests more consumers may be willing to explore homeownership.
Home sale prices ticked up 0.6% year-over-year in February to a median value of $287,400.
“When home prices are going up quickly, buyers feel like they are forced to move fast and purchase a home before prices rise even more. Now that home prices are growing slower than inflation (prices for consumer goods were up 1.5% annually in February), there really isn’t much downside to taking your time,” Daryl Fairweather, Redfin’s chief economist, said in a press release.
“And now that mortgage rates are no longer going up every week, buyers in many markets have the luxury of knowing that whether they buy now or later they will pay about the same for a home,” he said.
Though this news comes at a time when mortgage activity is slacking, a slowdown in upward pricing pressure sparks the potential for broader consumer interest in the housing market. The share of homes selling above their asking price declined nearly 4% in February from a year ago, suggesting fewer eager buyers, but a more level playing field for house seekers overall.
Though home sales have declined over the past seven months, they posted their first increase in February after rising almost 2% from the same period a year ago.
“Because homes are sitting on the market longer and the market is less competitive than last year, first-time homebuyers now have a better chance of winning a home,” said Fairweather. “That could mean more potential buyers in the spring. Home sales are already rebounding this month, and that trend may continue now that the market is more balanced.”