Home asking prices fell for the first time since March

The market slowed. It didn’t stop.

For the past few weeks, David and I have been pounding on one idea that a lot of agents need to hear right now: even in a tough market like this one, transactions don’t go to zero.

Let that sink in, because it changes how you see everything about today’s housing market. Rates are high, and many people have backed off. But some still are ready to do a deal. Your job is to figure out who they are.

That means zeroing in on the people, investors included, who have both the motivation and the means to act. In other words, people who are ready to make a move.

So where are they, and how do you spot them before your competition does? 

Scroll down. That’s exactly what I explore in today’s Foundation Plans. 

- James

Asking prices fell for the first time since March  

As of October 11, the median U.S. home-sale price rose just 0.5% year over year to $391,116, the slowest growth since March. The median asking price fell 0.3% to $396,881, its first annual decline since March. That’s according to Redfin’s latest market update.

Here’s what else it reports:

• A record number of price cuts: A record 22% of home sellers cut their asking price in the four weeks ending October 11. That’s up from 20.9% a year earlier and the highest share in Redfin’s records.

• Mortgage rates hit a 3-year high. The weekly average mortgage rate reached 7.4% on October 8, though daily rates have eased slightly since, dipping to 7.45% on October 14 from 7.61% a week earlier.

• Monthly payments are near record highs. The typical homebuyer’s monthly payment is $2,777, up 8.8% from a year ago and the highest level on record except for the previous week.

• Buyer demand is near record lows. Pending home sales fell 12.7% year over year, though they ticked up 1.5% from the prior week. Pending sales declined in all 50 of the most populous U.S. metros, the first time that has happened in three years, with Seattle (-26%) and Atlanta (-22.7%) seeing the steepest drops.

• Supply is growing slowly. Active listings rose 2% year over year to about 1.5 million, and months of supply climbed to 4.2 from 3.8, entering the 4-to-5-month range considered a balanced market. New listings, however, fell 1.3% from a year earlier.

My take

The most interesting detail in this report is easy to miss. A record 22% of sellers are cutting prices, but the share of homes selling above list price actually went up, to 23.6% from 23.2% a year ago. That sounds like a contradiction, but it isn’t. The market isn’t uniformly weak; it’s punishing sellers who overreach. Homes priced right are still drawing competition, while the ones listed as if it’s still 2022 sit until the owner gives in and cuts. The national averages hide that sorting, much as they hide San Francisco prices jumping 18% while Seattle’s fall 6%. So the “buyers’ market” story is only half true. Buyers have more room to negotiate on stale, overpriced listings, but a well-priced home in a good area can still mean a bidding war, even with rates at 7.4%.

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The most expensive luxury markets in the country

Luxury homes are getting a little more affordable.

In September, the national entry point for a luxury home (the top 10% of listings) slipped to $1.199 million. That’s down 3.6% from a year ago and marks the 30th straight month of annual declines. The threshold now sits at its lowest level since January 2023, about 14% below its May 2023 peak of roughly $1.40 million.

And buyers are still showing up. Luxury listings spent a median of just 76 days on the market, three days faster than last September.

Even with the national dip, the country’s top luxury markets start at more than double the national threshold. In Los Angeles, it’s more than triple.

Here are the country’s most expensive luxury markets with their starting list prices:

1. Los Angeles, CA: $3,949,634

2. Kahului, HI: $3,789,000

3. Naples, FL: $3,692,892

4. Stamford, CT: $3,597,500

5. San Jose, CA: $3,349,600

6. Crestview, FL: $2,865,779

7. Thousand Oaks, CA: $2,795,000

8. San Diego, CA: $2,697,104

9. New York, New York: $2,616,178

10. San Francisco, CA: $2,499,232

My take

National luxury home prices are edging lower, but the rankings among the most expensive markets are shifting dramatically. In June, Stamford topped the list at $4.20 million. Three months later, it had slipped to fourth, with prices down 14% from their peak. San Francisco, meanwhile, jumped 4% in a single month to rejoin the top 10, while New York rebounded after a 9% drop in August. But here's what's interesting: Despite all this price volatility, the luxury market is holding up better than the broader housing market. Typical homes are taking just as long to sell as they did a year ago, while luxury homes are selling three days faster. Wealthy buyers are still in the market and are willing to reward sellers who are willing to reprice.

States with the most foreclosure starts

In August, 40,277 U.S. properties had foreclosure filings in total, including default notices, scheduled auctions, or bank repossessions. That’s up 1% from the previous month and 13% from a year ago, according to ATTOM.

Here are the states with the most foreclosure starts and the highest foreclosure rates:

My take

Don’t let the big numbers fool you: Florida, Texas, and California lead in foreclosure starts mostly because they have the most homes. The more telling list is the rates, and that’s where South Carolina stands out. It doesn’t crack the top five for starts, yet one in every 1,547 homes there had a filing, more than double the national rate. Still, keep an eye on both Florida and Texas, since they’re the only states that rank high on both lists

Schematics

The news that just missed the cut

• Millionaire renters are surging – why the rich aren’t buying

• Ranked: the best staging tips to help sell a house

• How homebuyers can beat 7% mortgage rates 

• When you follow up, don’t make these mistakes

• What midterm elections could mean for realtors and the housing market

Foundation Plans

Advice from James to win the day

As I mentioned up top, and as David and I have been saying in the past few editions, don’t let the high mortgage rates scare you off. Even in our current rate environment, deals still can get done. The key is finding high-intent buyers and sellers who are willing and able to transact. But how do you do that?

That’s exactly what I explore in my conversation with Jimmy Miller in the latest episode of Rise Above the Ranks. Jimmy is the Senior Manager of Agent Enablement at Zillow. His entire job is to help agents leverage Zillow’s tech to find buyers and sellers who are ready to make a move. 

It’s a great conversation, and I think you’ll get a lot out of it. 

Here are the things we get into in our chat:

• Why your database is only valuable if you know who is ready to transact

• How technology can help agents identify high-intent buyers and sellers

• Why speed and timing can make or break an opportunity

• How today’s consumers are using AI and technology to become more informed

• How agents can use technology to work smarter without losing the human side of real estate

Watch the entire interview here. Afterward, drop me a line and let me know what you think.

Breezy

Feature of the Week — Efficiency

Breezy runs alongside real estate agents throughout the day and acts as an AI personal assistant in real time.

At a high level, Breezy does these things:

• Captures and organizes conversations so no follow-up or detail gets lost

• Generates branded comps and reports on the fly, ready for clients

• Keeps your pipeline current automatically, without manual updating

• Reveals how you can reposition and develop your property through proprietary software we call Underbuilt

Instead of agents juggling spreadsheets, notes apps, CRM updates, and presentation tools, Breezy brings those workflows together.

Get Breezy here!

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.” — Steve Jobs

Each day is a gift – a chance to live the life you want. Ruthlessly focus on your goals. Don’t let your past or the fear of being judged distract or paralyze you. Choose to live with an integrity that you can be proud of.

Have a wonderful weekend, and I’ll see you back here next Friday!

- James