Home Sellers Lower Asking Prices to Attract Buyers
As the spring homebuying season kicks off, more homeowners looking to sell are adjusting their initial asking prices to lure in potential buyers.
Recent data from Realtor.com shows that 14.6% of homes listed for sale in the U.S. last month underwent price reductions, up from 13.2% compared to the previous year. This marks the first annual increase since May, with January seeing a slight decrease to 14.7%.
The current percentage of homes with price cuts exceeds the monthly average dating back to January 2017, indicating a growing trend in the market.
This shift benefits homebuyers in a market where affordability remains a challenge for many. Despite a persistent shortage of available homes for sale, driving prices up, the adjustment in pricing reflects a more balanced approach.
"Sellers are adjusting prices to adapt to market conditions, resulting in more modest price increases," noted Danielle Hale, chief economist at Realtor.com.
The increase in the proportion of home listings with price reductions indicates a shift in the housing market towards a more balanced relationship between buyers and sellers. The historically low mortgage rates during the initial two years of the pandemic provided homebuyers with greater purchasing power, leading to intense bidding wars and a 42% surge in the median sale price of pre-owned homes in the U.S. between 2020 and 2022.
"The price cuts reflect a return to a more typical housing market environment compared to the past few years," mentioned Hale.
The percentage of properties that experienced a decrease in their listing price reached its peak in October 2018 at 21.7%. In October 2022, it came close to that peak at 21.5%.
During the previous year, the proportion of home listings with reduced asking prices spiked to 18.9% in October, coinciding with the average 30-year mortgage rate hitting a 23-year high of 7.79%, as reported by Freddie Mac.
This situation has compelled sellers to adjust their asking prices to align with the expectations of buyers, according to Hale.
If mortgage rates decrease this year, as predicted by many economists, this pressure on sellers could alleviate.
