The number of homeowners optimistic about selling their homes dropped in the third quarter, interrupting a streak of rising confidence as the housing market shifted out of their favor.
Out of hundreds of home sellers surveyed nationwide earlier this month, only 35.1 percent said now is a good time to sell a home in their neighborhood, according to the latest Real-Time Seller Survey from Redfin.
The response reflects a decline of more than 17 percentage points from the second-quarter survey, which found more than half of sellers felt they had an advantage in the market. At that time, 40 percent of people selling their homes said they were planning to take advantage of low inventory and high demand by pricing their house aggressively—a strategy that didn't pay off for many, Redfin says.
"In July and August, sellers were testing the market by pricing their homes above market value," said Denver-based Redfin agent Paul Stone. "They were hopeful, but many got the message too late that the market had already shifted. They had to adjust their expectations and their home prices. As of September, it seems that sellers have gotten the memo and are pricing closer to market value."
Throughout the month, Redfin reports 16.5 percent of homes sold above list price compared to 18.1 percent in August and 23 percent a year ago.
Even as more sellers bring their expectations in line with what's happening in the market, the majority are still hoping to get as much out of selling their home as possible. When asked why they're waiting to sell, 59.3 percent of respondents in Redfin's survey said they want to get the maximum price as appreciation continues to carry on (albeit at a much slower pace than a year ago).
"Sellers hoping for higher prices will face reality soon, as all signs point to lower price growth and less competition among buyers in coming months," said Nela Richardson, chief economist at Redfin. "Buyer demand is there, but only at the right price."
Sellers also cited supply concerns as a reason to wait, with 36.3 percent saying there's not enough inventory for them to find a new home—and with more than half of homeowners hoping to squeeze every dollar out of their listing, 16.3 percent said they're waiting right now because there aren't enough affordable homes to choose from.
With the stock of for-sale homes in markets served by Redfin was up 6.3 percent year-over-year last month, the company hopes more homeowners will feel secure in listing their own house, boosting supply further.
"Right now the real estate climate is very different from this time last year," said Shawn Flynn, a Redfin agent based in Boston. "While some sellers are disappointed that they can no longer expect double-digit price gains, increasing inventory and stabilizing prices provide relief for everyone—buyers and sellers—that we are moving toward a much more balanced market."