In the four weeks ending on September 16, Redfin online brokerage tells us that 25% or one quarter of all homes listed for sale nationwide had a price drop. Redfin defines a price drop as a “list price reduction of more than 1 and less than 50%” of the most recent price listing.
This 25% rate of price cuts is the highest rate of price slashing since Redfin began tracking price cut rates 10 years ago.
Taylor Marr, senior economist with Redfin, said, “There are some early signs of a softening market and this increase in price drops may be another indicator that sellers are going to have trouble getting the prices, and the bidding wars, that they may have gotten just months ago.” Now, after years of rising home prices, ”…buyers are taking advantage of markets…” and can be “…selective about which homes to offer on and how high to bid.”
Median home values are still rising nationwide, but they’re rising at a 4% rate whereas those values rose at a rate between 6-8% during the last two years.
With this lower rate of price increases and these 25% of all listed homes having price cuts, “…Homes continue to fly off the shelves with the majority of the properties selling within a month…” said Lawrence Yun, chief economist with the National Association of REALTORS®.
In Southern California, however, things are a bit different. Home sales dropped to its slowest pace in two years, according to the California Association of REALTORS® (CAR). Prices are still up 5-5.5% annually but 5% is not comparable to double digit increases which have been the norm in recent years. Also, DOM rose in this 4 week time period to 21 days from the previous 18 days.
Leslie Appleton-Young, senior vice president and chief economist with CAR, said, “We are seeing active listings increasing and more pricing reductions in the market.
Appleton-Young continues to wonder how long the price gap will take to resolve between sellers’ and buyers’ price expectations. If/when the Federal Reserve brings mortgage interest rates up to 5%, this particular gap may resolve itself sooner rather than later.
