Numerous reports by real estate firms suggest that buyers might be beginning to see a discount in the hot housing market. There are more listings available, while some sellers have lowered their asking price. 

Realtor.com reports that the number of properties for sale last week rose by 8 percent compared to a year ago. After four consecutive weeks of declining annual new listing numbers, this week’s increase in listings was 8%. Although the total inventory of available inventory remains at 13% below a year earlier, this may change with an increase in new listing to exceed year-ago levels later this summer. The peak for new listings is in May.

However, the prices remain well above those of a year ago. Higher mortgage ratesAlso, houses are becoming more expensive. Average monthly payments are now 38% higher than what they were paying a year earlier for the same property.

General inflation and mortgage rate rises can mean that some buyers have less financial flexibility in order to buy newly listed homes. The silver lining for those buyers who are able to afford it could be that there is less competition and more homes available for sale. This could help offset rising home prices.

With more homes on the market and rising mortgage rates, sellers are returning to Earth, at most a small degree. In the last four weeks of April, 12% percent of houses for sale experienced a drop in price. According to Redfin, this is an increase of 9% from last year. Since August, the rate at which sellers drop their asking prices has been increasing faster per month.

Redfin chief economist Daryl Fairweather stated that although price drops may still be rare, they have become more common. This is a clear indicator that the housing market has cooled. This shows sellers that they have limited power. Buyers are still in high demand, so sellers must not overprice homes to get buyers to come knocking on their doors.

Buyers are worried because the average fixed 30-year mortgage rate has increased steadily over the last few weeks. It had been increasing since January. This week it surpassed 5% according to Mortgage News Daily. Fannie Mae conducted a monthly survey to find that consumers were more negative about the housing market and mortgage rates.

Consumers now expect rates to go up further, increasing to 69% from 67% as of March. Consumers also believe that home prices will rise further.

Mark Palim, vice president and deputy chief economic economist at Fannie Mae, stated that “if consumers continue to be pessimistic about homebuying, and the current mortgage rate hikes, we anticipate a greater cooling of housing markets than originally forecast.”