More homeowners eager to sell their home are lowering their initial asking price in a bid to entice prospective buyers as the spring homebuying season gets going. Some 14.6% of U.S. homes listed for sale last month had their price lowered, according to Realtor.com. That’s up from 13.2% a year earlier, the first annual increase since May. In January, the percentage of homes on the market with price reductions was 14.7%.
Quick Read
- More homeowners are reducing their asking prices to attract buyers as the spring homebuying season begins.
- In February, 14.6% of U.S. home listings saw price cuts, an increase from 13.2% the previous year, marking the first annual rise since May.
- The trend of listings with price reductions is slightly above the average since January 2017, indicating a shift towards a more balanced market between buyers and sellers.
- Despite price cuts, overall home prices continue to rise due to a persistent low supply of homes for sale.
- The peak of listings with reduced prices was 21.7% in October 2018, with a similar spike to 21.5% in October 2022.
- High mortgage rates in 2022, reaching a 23-year peak of 7.79%, led to a significant increase in price reductions.
- Mortgage rates decreased in December but rose through most of February, putting pressure on sellers to adjust their asking prices.
- This pressure may decrease if mortgage rates fall as predicted by many economists.
The Associated Press has the story:
Home sellers cut list prices as spring season starts with higher mortgage rates
Newslooks- LOS ANGELES (AP) —
More homeowners eager to sell their home are lowering their initial asking price in a bid to entice prospective buyers as the spring homebuying season gets going.
Some 14.6% of U.S. homes listed for sale last month had their price lowered, according to Realtor.com. That’s up from 13.2% a year earlier, the first annual increase since May. In January, the percentage of homes on the market with price reductions was 14.7%.
The share of home listings that have had their price lowered is running slightly higher than the monthly average on data going back to January 2017.
That trend bodes well for prospective homebuyers navigating a housing market that remains unaffordable for many Americans. A chronically low supply of homes for sale has kept pushing home prices higher overall even as U.S. home sales slumped the past two years.
“Sellers are cutting prices, but it just means we’re seeing smaller price gains than we would otherwise have seen,” said Danielle Hale, chief economist at Realtor.com.
The pickup in the share of home listings with price cuts is a sign the housing market is shifting back toward a more balanced dynamic between buyers and sellers. Rock-bottom mortgage rates in the first two years of the pandemic armed homebuyers with more purchasing power, which fueled bidding wars, driving the median sale price for previously occupied U.S. homes 42% higher between 2020 and 2022.
“Essentially, the price reductions suggest far more normalcy in the housing market than we’ve seen over the last couple of years,” Hale said.
The share of properties that had their listing price lowered peaked in October 2018 at 21.7%. It got nearly as high as that — 21.5% — in October 2022.
Last year, the percentage of home listings that had their asking price lowered jumped to 18.9% in October, as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to Freddie Mac.
Mortgage rates eased in December amid expectations that inflation has cooled enough for the Federal Reserve begin cutting its key short term rate as soon as this spring. Those expectations were dampened following stronger-than-expected reports on inflation and the economy this year, which led to a rise in mortgage rates through most of February.
That’s put pressure on sellers to scale back their asking price in order to “meet buyers where they are,” Hale said.
That pressure could ease if, as many economists expect, mortgage rates decline this year.
