Home Sellers Dropping Asking Price in Most Metros
Price drops have become a common feature of the cooling housing market, particularly in places that were popular with homebuyers earlier in the pandemic, reported Redfin, Seattle.
In a separate report, Redfin said homes for sale nationwide in June rose by 2%, the first annual increase since July 2019.
“Home sellers are contending with a rapidly changing market, especially in places where they’re used to their neighbor’s homes getting multiple offers and selling for more than asking price,” said Redfin Senior Economist Sheharyar Bokhari. “Higher mortgage rates and a potential recession are causing prospective buyers in popular migration destinations to press the pause button, and they’re also having a big impact on workers in big job centers who rely on their stock portfolio for down payments.
Redfin reported nearly two-thirds (61.5%) of homes for sale in Boise, Idaho had a price drop in June, the highest share of the 97 metros in the analysis. Next came Denver (55.1%) and Salt Lake City (51.6%), each metros where more than half of for-sale homes had a price drop. They were followed by Tacoma, Wash. (49.5%), Grand Rapids, Mich. (49.3%) and Sacramento (48.7%). Seattle (46.3%), Portland, Ore. (45.7%), Tampa, Fla. (44.5%) and Indianapolis (44.1%)—all of which saw price cuts for nearly half the for-sale homes—round out the top 10.
“In places like Denver, Seattle and Portland, some buyers feel less confident about their finances in the face of a shaky economy and faltering stock market,” Bokhari said. “Sellers are adjusting their expectations in real time as they realize they may not get the price their neighbor got two months ago.”
The report said Boise also had the biggest increase in the share of listings with price drops from a year earlier, when 25.7% of sellers cut their price. Denver, Salt Lake City and Grand Rapids were also among the 10 metros with the biggest upticks from a year earlier.
“If demand plateaus in the coming months, price cuts are likely to be less common as sellers realize the market has shifted and price realistically from the start,” Bokhari said. “But if demand falls further, sellers will continue to play catch-up and cut prices to attract buyers.”
Redfin said more than three-quarters of the metros in Redfin’s analysis saw more than 25% of home sellers drop their asking price in June. More than 10% of home sellers dropped their price in all of the metros.
Complicating the mix for home sellers, Redfin said supply has built up as the combination of 5.5%-plus mortgage rates, high home prices and a faltering economy push more buyers to the sidelines, thereby creating a more balanced market.
Redfin said home sales fell nearly 16% from a year ago, the largest decline since May 2020. The shift has also started impacting sale prices: They’re still growing by double digits, but the 11% year-over-year increase is the smallest in nearly two years.
“The country’s economic woes have already cooled the housing market, and they’re likely to continue dampening demand,” said Redfin Chief Economist Daryl Fairweather. “The Fed has signaled it may increase interest rates further to combat stubbornly high inflation, which could harm consumer confidence, and lower stock prices mean fewer prospective homebuyers can afford a down payment.”
