**KEY TAKEAWAYS**
More home sellers are reducing prices and pulling listings off the market as buyers hit their financial limits.
High home prices and increased mortgage rates have led to record-high average monthly payments.
Experts suggest the market may need a correction, prompting sellers to reduce ambitious pricing. More homeowners are listing their homes to capitalize on high prices but are finding buyers unwilling or unable to meet their expectations.
According to data from Redfin, the number of listings with price drops rose to 6.5% in the week ending June 9, the highest since 2022. Additionally, nearly 9% of listings had been taken off the market without selling by late May, about double the usual rate since 2017, as analyzed by real estate strategist Mike DelPrete.
This data indicates that buyers are reaching their financial limits as prices and mortgage rates climb. Just as consumers hesitate to pay $20 for a hamburger, homebuyers are reluctant to pay record-high prices. Prices may need to cool down.
"This is the start of a price correction; sellers are bringing more inventory to market, but with 'aspirational pricing' that buyers are not willing to pay," DelPrete noted in a recent blog post. "The record number of pricing corrective measures will likely lead to an overall correction—lower prices—as supply and demand continue to rebalance."
**Why Is Buying a House So Expensive Right Now?**
Home prices vary by source, but most measures indicate record highs. The median home price was $394,000 in the week ending June 9, according to Redfin, while the National Association of Realtors reported a median of $407,600 in April, the highest for that month.
Meanwhile, near-record mortgage rates have increased monthly payments. With a 30-year mortgage rate at 6.99% last week, Redfin estimated the typical monthly payment at $2,829, just $30 below the April peak.
**Everyone Is Sick of Housing Being So Expensive**
High home prices and mortgage rates are significantly impacting household budgets, creating a widespread economic problem. A Bipartisan Policy Center poll found 74% of U.S. adults see the lack of affordable homes as a "significant problem," with agreement across political affiliations.
Lowering home prices and mortgage rates could improve affordability, but both would need to drop significantly to match pre-pandemic levels. The average rate for a 30-year mortgage fell to 6.95%, according to Freddie Mac, as inflation cooled faster than expected.
**Falling Mortgage Rates Alone Aren't the Solution**
However, lower mortgage rates alone may not solve the problem, as they could increase home prices.
"If lower mortgage rates bring back more demand than supply, that could erase the possibility that home-price growth softens and push prices up even further," Chen Zhao, Redfin’s economic research lead, explained. "Lower rates and higher prices may ultimately cancel each other out regarding homebuyers’ monthly payments."
In the long term, housing experts agree that increasing the housing supply is crucial to making homes more affordable.
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