More home sellers cut prices as buyers gain leverage
More U.S. home sellers are cutting asking prices as listings pile up and buyers pull back. About one in five listings had a price cut in September, the highest share for that month since 2018, Realtor.com says. But mortgage rates above 7% mean many buyers still cannot take advantage.
The national housing market is gradually tilting toward buyers, but elevated borrowing costs are keeping many potential purchasers on the sidelines.
The share of active listings with a price cut rose to 20.8% in September, the highest September reading since 2018, according to Realtor.com's monthly housing report. The national median list price fell to $419,250, down 1.4% from a year earlier, the 11th straight month of yearly declines.
Shoppers also have more homes to choose from: active listings grew 5.4% from last year to more than 1.16 million, the closest to typical pre-pandemic inventory in the current recovery. However, the number of homes under contract fell 4.1%, a sign that fewer buyers are committing to purchases.
"Buyers are gaining leverage, but higher mortgage rates are limiting how much of that opportunity they can use," said Danielle Hale, Realtor.com's chief economist.
Redfin found more than one in five sellers cut prices in the four weeks ending Sept. 20, the highest share for that time of year since it began tracking in 2022, the Baton Rouge Business Report said, citing Fortune. Denver led large metros at 30.9%, while San Francisco had the lowest share at 9.6%. Redfin estimates sellers outnumbered buyers by 58% in August, the widest gap in records back to 2013.
Colorado stands out nationally. Cooper Thayer of the Colorado Association of Realtors told KOAA that the typical home there is closing for 2% to 5% below the original asking price. Buyers are also using their negotiating leverage to ask sellers to cover closing costs or pay to buy down mortgage rates. "We have the biggest discrepancy between seller and buyer expectations ever," he said.
Lower asking prices do not mean homes have become affordable. The average 30-year mortgage rate reached 7.28% as of Oct. 1, the highest since November 2023, the Business Report noted. Thayer warned that sellers who price their homes too high risk longer listing periods, additional carrying costs and buyers wondering what is wrong with the property.
What we know: Price cuts and listings are rising while pending sales fall.
What we don't: Whether mortgage rates will ease enough to bring buyers back.
Where outlets agree The Baton Rouge Business Report and KOAA News5 both report that mortgage rates above 7% are limiting buyers even as more sellers cut prices.
Where they differ Colorado Realtor Cooper Thayer told KOAA News5 about 26% of U.S. listings had price cuts in August, while AZ Business Magazine, citing Realtor.com data, puts the national share at 20.8% in September, up 0.5 point from August.