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"Price drops are still rare, but the fact that they are becoming more frequent is one clear sign that the housing market is cooling," said Daryl Fairweather, Redfin's chief economist."It goes to show that there's a limit to sellers' power. There is still way more demand than supply, and buyers are still sweating, but sellers can no longer overprice their home and still expect buyers to clamor at their door.
Buyers are sweating because the average rate on the 30-year fixed mortgage, which has been rising since January, really took off in the past few weeks. It surpassed 5% earlier this week,. Consumers are more pessimistic about the housing market, according to a monthly survey from Fannie Mae, and especially about mortgage rates.
The share of consumers who expect mortgage rates to rise further increased to 69% from 67% in March. More consumers also said they believe home prices will continue to rise. "If consumer pessimism toward homebuying conditions continues, and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast," wrote Mark Palim, vice president and deputy chief economist at Fannie Mae.