A report released by National Mortgage News this week has officially confirmed what many of us already knew. As potential homebuyers have dropped out of the market, sellers across the nation have begun to panic. Listing prices are falling, but, what is most surprising, is that mortgage rates have been dropping for two straight weeks as well.

After a period of record setting growth, many sellers are lowering asking prices in a desperate attempt to sell their properties. And here's a fun fact on this: some of the hottest housing markets over the past twelve months are now the same places with the biggest price cuts.

The percentage of sellers who dropped their asking prices over the past month? 19.1%, or almost one out of every five. This marks the highest percentage of listing price drops since October of 2019, nearly three full years ago.

More Metrics Backing Up This Trend

Buyer demand, time on market for individual listings, and the percentage of homes sold over asking price have also plateaued, some even shrinking over the past weeks. And Yahoo Finance is reporting something else going on out there in the housing market: a sudden drop in mortgage rates.

This is one that nobody saw coming, at least not this early in the calendar year. In a nutshell, 30 Year-Fixed rates looked like they were well on their way to climbing over 6% in a matter of weeks. What happened was the exact opposite.

For two weeks in a row now, mortgage rates are down-ticking, with the current average standing at 5.1%, down from 5.3% just days prior. It’s a trend worth watching, as the Fed’s recent course correction seems to be effectively cooling the market already.

Brokerages Still Reporting Strong Sales

Many real estate agents are still seeing properties move quickly, but, at the same time, new listings are up, crowding the supply side of the market. Some agencies have reported new listings rising twice as fast as they were a year ago at this same time.

What this likely means is sellers know the clock is ticking. They want to sell now, while buyers are still out there, and they’re worried the pool of buyers may simply dry up before they’re able to get what they want for their homes.

The recent drop in mortgage rates could signal a bit of a change here however. It’s a delicate balance when it comes to rates and home prices. For refinancers, there are still some lenders offering rates at or even below 4%. But those numbers may not be available much longer.

Housing Moves From Hot to Cold … Here’s Why That’s Good for You

Over the past year or so, we saw home prices and values absolutely BOOM. Buyers were bidding insane amounts over asking price just to get the home they wanted. The question now is, have we witnessed the peak?

The Federal Reserve’s Chair, Jerome Powell, recently made an announcement indicating a move from more neutral rates, into a restrictive zone, in an attempt to cool the market.

The surprising part of all of this is the recent downturn in rates. The steam taken out of the housing market, dropping rates down to 5.1%, or even less for some borrowers, could incentivize buyers to get back in the proverbial water.

Mortgage Rates on an Island

Thing is, the Fed raising interest rates doesn’t always automatically equate to rising mortgage rates. Which is why some lenders are still offering mortgage terms with rates as low as 3.5% in some cases.

The best way to ensure you lock in the lowest rate and the most favorable terms, regardless of whether you’re buying a primary residence, second home, or investment property, or if you’re looking for a cash-out or rate and term refinance, is to compare your options.

Running side-by-side comparisons, crunching your numbers down to the penny, and taking into account elements like your credit score and DTI (debt-to-income ratio) are all key factors when calculating your new mortgage payment. And with rates and asking prices both on a downturn at the same time, the time to strike may very well be right now.