- Home prices will fall this summer as owners cave to selling pressure, according to Redfin's CEO.
- The real estate brokerage is anticipating a 1% price drop by the end of the year.
- Homes in Florida and Texas are already beginning to see "major price cuts," the firm said.
House prices will drop this summer as homeowners trying to wait out high mortgage rates are realizing they can't postpone moving any longer, according to Redfin CEO Glenn Kelman.
The chief executive of the online real estate brokerage pointed to signs that the housing market is starting to get more affordable.
Homes in key metros, like Florida and Texas, are already seeing "major price cuts," Kelman said. Meanwhile, over 6% of US home sellers issued a price cut in May, the largest proportion recorded in over a year, Redfin found in a recent report.
The decline in prices is due to homeowners giving up on trying to wait out high mortgage rates. As more owners opt to list their home after a year or more of waiting, supply of available inventory is growing and prices are beginning to budge, Kelman said.
"A lot of our customers are folks who got a divorce last year, and the husband and the wife are driving each other crazy, or they own a townhouse, and they've had a third child, and they're just bursting at the seams," he said in a recent interview on The David Lin Report. "At some point, even though people don't want to sell, they have to sell."
According to Redfin data, the supply of available homes rose to 1.6 million in April, up 13.7% from the same time last year. Meanwhile, the number of newly listed homes for sale rose to 621,000, up 17.4% from last year.
"We really saw, in the first three or four months of the year, new listing accelerate. Now there's just a large number of active listings," Kelman said. "When homes sit on the market, you start to see prices soften."
Redfin is predicting US home prices will fall 1% by the end of the year. That price decline could take time, though, Kelman said.
"Homeowners are emotionally committed to their property. They have in mind a number, and they're loathed to give it up. So that makes home prices stickier," he later added. "But still, I think it's going to be a pretty soft summer for home prices."