Home prices are falling in nearly every major U.S. metro, and in many cases, they are dropping by the largest percentage since 2019. Moreover, they are falling even lower than the original asking price. Single-family homes are worst affected, according to a Redfin report.
The period from June to August should have seen a lower share of listings with price cuts, if historical patterns held. But this year they did not. Instead, 16.7% of sellers lowered asking prices – the highest level in 13 years -- compared to 15.9% the previous August. Indeed, the typical home sold for 3.8% less than its original asking price – the deepest plunge since 2019.
Sellers are confronting a market where they outnumber buyers by 500,000. Buyers are seizing the opportunity to explore a wider range of options and prices before they sign contracts. “More sellers are cutting prices because high housing costs, economic uncertainty and rising inventory have made it a buyer’s market.” Yet the report found many sellers are still listing too high, having failed to recognize the broad shift in market dynamics.
Worse yet, when sellers drop prices, buyers sense weakness and demand further cuts. Realistic price-setting by sellers is key, as well as accepting that time and patience may be needed before deals close, according to Redfin.
Single-family homes are experiencing the severest effects. Prices on nearly one in five (18.3%) such homes were slashed in August, compared to 13% of condo and 11.5% of townhome listings. The divergence is because the condo and townhome markets have been weak for many years, especially in Florida and Texas, due to rising insurance costs and HOA fees.
Price drops are becoming more common in nearly every major U.S. metro, the report stated. The steepest plunges were in Denver (31% of sellers), Indianapolis (30.7%) and San Antonio (28.5%). More than one-quarter of sellers dropped prices in Austin, Dallas, Tampa, Houston, Jacksonville, Portland, OR and Fort Worth.
Of the 50 most populated metros, 38 saw more listings where prices had been lowered. The steepest increases were in Washington, DC, San Jose and Indianapolis. Major coastal metros fared better. The smallest drops in prices were in Newark (10.7%), New York (11.7%) and San Francisco (12.2%).
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