Even with demand buoyed by a sparse housing inventory, growing financial challenges for buyers are forcing home sellers to cut prices to close deals, a new Redfin research report found.
According to the brokerage, 6.5% of U.S. homes for sale posted a price cut during the four weeks ending September 24, up from 5.8% the month prior.
In some markets, more than 50% of active listings have experienced a price cut, according to Altos Research. The five metro areas with the highest percentage of listings with price cuts for the week ending Sept. 22 were Wenatchee-East Wenatchee, Washington (53%); Idaho Falls, Idaho (52%); Carson City, Nevada (52%); Austin-Round Rock-San Marcos, Texas (52%); and Waco, Texas (51%).
Due to a lack of supply, prices overall have been on the upswing. The median U.S. home sale price rose 3% year over year, reaching $420,846 in August, the largest annual increase since October 2022. And because mortgage rates have been above 7% for about two months consecutively, the cost of financing is extreme. The average principal and interest payment among borrowers purchasing a home using a 30-year fixed-rate loan hit its highest point ever in July at $2,306, according to Black Knight’s mortgage monitor report. With taxes and insurance, most buyers today are approaching $3,000 or more
Pricing accurately is paramount
“Pricing is the absolute number one, most important factor when somebody sells their home,” Robert Andert, a real estate agent on The Minnesota Real Estate Team, told HousingWire in an interview in July. ”So even in the market that we’re in now, with a high demand, if a home is overpriced, it’s not necessarily going to move right away.”
On the one hand, there are very few homes on the market, with total inventory down 15% year over year, according to Redfin. But on the other hand, homebuyers are also growing more price-sensitive as monthly payments eclipse an all time high.
“Buyers are picky and they don’t want to pay a dollar more than they need to,” the report said.
Available inventory of home for sale is ticking up
Hence, homebuyers are encouraged to negotiate with sellers, who seem willing to make concessions. However, available inventory of homes for sale is on the rise in late September, a very unusual trend for the season, Altos Research’s Mike Simonsen noted in a HousingWire article this week. It is giving buyers a little more leeway and allow them to chose from a larger selection of homes.
