What old lawn needs to be, we hear? It's faded (7)
I believe the answer is:
receded
'faded' is the definition.
(to recede is to fade or decline)
'what old lawn needs to be we hear?' is the wordplay.
'what old lawn needs to be' becomes 'reseeded' (an old lawn might need seeding again).
'we hear?' indicates a 'sounds like' (homophone) clue.
'reseeded' sounds like 'RECEDED'.
'it's' acts as a link.
(Other definitions for receded that I've seen before include "Went back as hairline may" , "Pulled back" , "Fell back" , "Went back or retreated" , "Moved backwards" .)