A house for sale sign with "price reduced"

More sellers are cutting prices as home sales slow 

The share of homes with price drops reached an 18-month high as sellers try to jumpstart buyer interest in stale listings, Redfin reported.

May 31, 2024
3 minutes

Key points:

  • The percentage of homes with price cuts has risen steadily this year and is now at the highest level since November 2022.
  • Asking prices have also fallen for the first time in months, but list prices and sale prices are still at near-record highs.
  • Buyers have more choices, with active listings up 15% compared to a year ago, but still need to be flexible if they hope to avoid bidding wars.

As mortgage rates move back above 7% and inventory continues to build, homes are sitting on the market longer, prompting sellers to lower their asking price.

A new Redfin report found that the share of homes with price cuts over the past month reached 6.4% — the highest level in 18 months, corresponding with a recent increase in days on market. By comparison, at the beginning of the year, just 3.9% of homes had price cuts.

The recent rise in cuts has resulted in the first dip in asking prices in six months, the report noted, despite median sale prices sitting at record highs in April.

More signs of cooling as summer approaches

All of those factors taken together could mean the pace of price growth will begin to wane this summer. The latest price data from CoreLogic indicates that growth is still strong — but the numbers only go through March, and as interest rates have remained elevated this spring, buyer activity has been tepid. 

The effects of high home prices and mortgage rates appear to be reflected in the sales numbers. Last week, NAR reported that existing home sales fell for the second straight month in April, and today's pending sales data — which found that pending sales plunged 7.7% from the previous month — suggests that closed contracts will decline over the next two months. 

Will slowing sales — and rising inventory — mean that buyers will soon find some bargains?

Buyers hitting pause as they face affordability challenges

While prices could continue to dip, affordability is still a major issue for many would-be purchasers given the rapid rise in housing costs. In just the past four years, median list prices have gone up nearly 30%, or more than $100,000. 

A recent Bright MLS survey found that many buyers have decided to pause their home search in the face of high borrowing costs, competition from cash buyers and high home prices. But for those who are still in the hunt, there are more options, with active listings up 15% year-over-year. 

"People who are buying right now are typically doing so because they're having a baby or looking for a more family friendly home," said Redfin Premier agent Christine Chang.

"My advice for those buyers is to be open-minded: Consider single-family homes that are a bit outdated but don't need major renovations, and/or homes in lesser-known, non-trendy neighborhoods. That type of home tends to sit on the market longer, and buyers may be able to avoid competition and get a home for asking price instead of engaging in a bidding war."

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