3 Things You Need To Know About the Fall Selling Season

As summer comes to an end, the national housing market that has favored sellers for the past few years has moved into “neutral” territory as fall approaches, putting buyers and sellers on equal footing. If you plan to sell in the fall, you may be wondering, what exactly does a “neutral market” mean? According to Zillow® Senior Economist Orphe Divounguy, a more balanced market is likely to have fewer buyers, but those who are still shopping are high-intent buyers looking for a good deal.

It’s the kind of market, he says, that underscores the importance of pinning down a correct list price since well-priced and well-marketed homes go under contract in just 18 days, while other listings linger. 

Strategically pricing a home to sell is never an easy feat, but it’s especially challenging in the fall when affordability remains a critical issue for struggling buyers. Nationally, more than a quarter of sellers (26.3%) cut prices in July, the highest rate in five years for the spring-summer selling season. 

“Sellers haven’t gotten the memo quite yet,’’ says Divounguy. “They're still listing their homes too high. That's why you're seeing more price cuts on these homes. And the homes that are mispriced are staying on the market longer.”

Beyond lessons in pricing a home to sell, there’s a lot for sellers — and future home buyers — to unpack this fall, from widely varying local market conditions to questions about where mortgage rates will land. Here’s what we think you can expect in the 2024 fall selling season.

1. Slow or flat home price growth, but improvements in affordability, could bring back more buyers than sellers

Fall usually represents the slowest time of year for home sales, in part because buyers with children tend to pause their home shopping when the school year starts. Zillow research shows that buyers retreated from home shopping earlier this year than they normally do, which cooled competition nationally and prompted sellers to cut prices and offer concessions to attract buyers.

The pullback affected inventory, which grew in July in all but five major metros analyzed by Zillow economists. It’s also affecting home values, which crept up only slightly in July, according to a recent Zillow analysis. Zillow’s forecast calls for a 1% increase in home values nationally in the next 12 months, a marked slowdown from the past few years, Divounguy says.

“While price growth could continue to ease somewhat, I don't expect big price declines,’’ he says. “We’ll need to see a big increase in inventory to see a large decline in home values. Recent small improvements in affordability could bring back more buyers than sellers, which could slow the increase in housing inventory, and prevent the market from cooling further.”

Zillow research estimates there was a shortage of 4.5 million homes in the U.S. in 2022. On top of the shortage, new construction hasn’t kept pace with the number of new households formed every year. For sellers, the shortage is likely to mean stable home values for the foreseeable future, even as buyers struggle with affordability, according to Divounguy.

2. Mortgage rates may not fall much further

The Federal Reserve Board is widely expected to cut its key policy rate in September and possibly beyond that. However, current mortgage rates may already reflect Fed expectations. 

“Lenders typically base their rates on long-term economic factors, such as inflation and the overall health of the economy,” he says. “So, while the anticipation of Fed rate cuts may have some impact on mortgage rates now, further mortgage rate declines are less likely if economic growth remains strong.”

The US economy is still expanding at a 2% seasonally adjusted annual rate in the third quarter, but it’s slowed from the 2.8% seasonally adjusted rate recorded in the second quarter.

Housing affordability has improved slightly, but remains a major constraint for most potential buyers. An influx of buyers seeking to take advantage of the recent decline in rates could boost home prices. And since rates aren’t likely to keep declining, buyers are likely to continue feeling stretched by the combination of high home prices, higher interest rates than in the recent past, and the burden of saving for a down payment.

3. Well-priced and well-marketed homes still sell quickly

The affordability challenge means buyers are looking for the best deals. 

While most listings linger, well-priced and well-marketed homes are still selling fast. Homes that sold in July went pending in just 18 days — six days slower than a year ago, but still faster than before the pandemic.

Zillow research also shows that modern features that signal a home is either brand new or recently remodeled contribute to higher sale premiums. Minor improvements that give your home a “new construction” look, marketing tools like 3D Home Tours and virtual floor plans on your listing, and strategic pricing can make all the difference. 

The local picture

While the national market is no longer a seller’s market, the local picture is mixed. Some markets still favor sellers, and others tilt in buyers’ favor.

Hottest sellers markets

Northeast metros topped the list of markets where sellers have a strong edge. Markets that strongly favor sellers are: Rochester, NY; Syracuse, NY; Buffalo, NY; Albany, NY; Hartford, CT; San Jose, CA; Springfield, MA; Worcester, MA; San Francisco, CA; Madison, WI; Bridgeport, CT; Akron, OH; Boston, MA; Providence, RI; New Haven, CT; Cleveland, OH; New York, NY; Minneapolis, MN; Richmond, VA; Washington, D.C.; Grand Rapids, MI; St. Louis, MO; Seattle, WA; Milwaukee, WI; Los Angeles, CA; Allentown, PA; Columbus, OH; Chicago, IL; Kansas City, MO; Portland, OR; Baltimore, MD and Sacramento, CA

Metros where buyers have an edge

Only 11 markets favored buyers in July, with more than half of those located in Florida. They are: Cape Coral, FL; McAllen, TX; New Orleans, LA; North Port, FL; Deltona, FL; Miami, FL; Jackson, MS; Jacksonville, FL; Tampa, FL; Palm Bay, FL and Memphis, TN

Key takeaways for sellers this fall

Keep an eye on Zillow’s Market Heat Index. The best thing prospective sellers can do is assess their market to see whether they’re in a market that favors buyers or sellers.

Consult with an agent to discuss strategy based on local market conditions. A real estate agent who is an expert on your market can evaluate your home to determine what it might sell for, given the local conditions and what other similar homes nearby have sold for recently.

Pay attention to pricing. Well-priced homes in good condition continue to sell quickly, but getting the price right can take some doing if there haven’t been many sales in your area for comparisons, Divounguy says.

Consider offering concessions. Sellers could more quickly if they offer concessions that help buyers lower their monthly mortgage payment. The National Association of Home Builders reports 61% of builders offer concessions to remain successful in this environment without having to cut prices.

“If builders are offering incentives to buyers, then sellers should probably do the same in order to keep well-priced homes moving,’’ Divounguy says. 

Sellers can always shoot for the moon, but they risk having to make price cuts later that could make their home less attractive than a well-priced offer, he says. “It’s important to keep an eye on these trends when selling a property,’’ says Divounguy. “Understanding when the market tends to heat up or cool down can help inform decisions.”