Rates hitting homebuyers’ budgets, reports find

The report added that sellers were slower to adjust to the cooling market, but that “they are starting to react to buyers’ declining budgets”, noting that 21% of home sellers dropped their asking price in the last four weeks – up from 10% a year earlier.

Redfin deputy chief economist, Taylor Marr, said: “When mortgage rates go up, buyers’ budgets go down. And when buyers’ budgets go down, sellers have to meet buyers where they are.

“Budgets haven’t fallen from a year ago and we don’t expect home-sale prices to fall, either. But the fact that budget growth has slowed so significantly is one sign among many that home-price growth will continue to slow as the year goes on.”

Redfin said slowing price growth “is good news for buyers” but added that they will still have to contend with higher mortgage rates. It also advised sellers to “price their home accordingly” as buyers were sensitive to mortgage rates and were consequently “gaining some power” in deals.

Freddie Mac report

In a separate development this week, Leonard Kiefer, Freddie Mac’s deputy chief economist, noted that 30-year fixed mortgage rates were already edging towards the 6%-mark, something he had not seen since 2008, adding that there was anecdotal evidence that some lenders were already “above 6%”.