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There are indications that the housing market is waving towards supporting buyers. But new concerns about the economy are pulling some buyers back.
For home buyers, home prices have slowed down, and mortgage rates have receved since their recent peak.
The median selling price was $375,475 for the four weeks that ended February 16th, according to real estate broker Redfin. This is the smallest increase in nearly five months.
Meanwhile, per Freddie Mac data, the average 30-year fixed-rate mortgage for the week ending February 13th was inched out to 6.87%. This is the lowest ever, down from its latest peak in January, 7.04%.
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But “buyers are still facing this massive, affordable challenge,” said Orphe Divounguy, senior economist at Zillow.
Mortgage applications for the week ending February 14th fell 6.6% from a week before the week, according to data from the Mortgage Banks Association. Experts predicted home sales data for January (scheduled to be released on Friday) and showed a decline.
In addition to the relatively high costs, some buyers may be rethinking about uncertainty creeping up about the broader economy, according to Redfin economist Chen Zhao.
“A lot of that comes from the White House,” she said of why buyers are worried.
Promising signs in the housing market
According to experts, a number of factors in the housing market are giving buyers room to negotiate prices.
For one, stocks are growing as more owners bring their homes to market. With more options available, buyers “have a little more negotiation power in the market,” Divounguy said.
According to Redfin data, there were 564,642 new homelists in January, up 1.9% from a month ago and 4.7% from the previous year. Since July 2022, the new home list has reached its highest level.
Some home sellers are also cutting prices down for what they want. A typical home sells 2% less than the asking price, the biggest discount in two years, per Redfin data.
Buyers are worried about the economy, unemployment
Some buyers are rethinking their plans taking into account broader economic uncertainties, experts say.
As of mid-February, thousands of workers from multiple federal agencies and departments have been fired as part of President Trump’s aim to reduce the government’s workforce.
This will make people who work directly with the government or are funding the federal government by saying “there could be a major change in the horizon” through contract work or federal funding.
“They are worried about job safety,” Zhao said.
“The first thing you might do is refrain from making really big purchases because you’re worried about financial security,” she added.
Many of them come from the White House.
Chen Zao
Redfin’s Head of Economic Research
The anxiety never stops – the possibility of a trade war and the dramatic changes in government spending may make Americans wonder, “What’s next?” Zhao explained.
Trump has signed a memorandum of understanding from the president that he plans to impose “mutual tariffs” on foreign countries. The plan allows the United States to treat other countries’ non-tariff policies as unfair trade practices that guarantee tariffs accordingly.
For consumers, they can be hesitant to invest in a new home as daily items can increase prices and accelerate inflation.
How to navigate the buyer market
If you’ve been on the market for a while and see a house you really like, then negotiate hard on the price and see where it goes, Zhao said.
If the home seller is unable to lower the asking price, check if they can cover additional costs, such as closure fees, and if they can pay the buyer’s real estate agent fees.
These are valuable concessions.
According to Nerdwallet, the closing costs could run between about 2% and 6% of the loan amount. Take out a $300,000 mortgage and you can pay from $6,000 to $18,000 for closing costs in addition to your down payment.
According to a data analysis by Redfin, the average buyer agent committee was 2.37% for homes sold in the fourth quarter of 2024.
If not, check out the new build market. Some builders offer incentives such as “in-house lending,” and often offer favorable loan terms, such as low rates, experts say.
