Homebuyers are gaining leverage as sellers cut prices, offer concessions and listings linger, though affordability challenges keep sales near historic lows.
LOS ANGELES — Skyrocketing housing values and a shortage of homes on the market gave homeowners the upper hand for years when it came time to sell. That’s no longer a given.
Across the country, it’s getting tougher for sellers to drive a hard bargain. A dearth of home shoppers who can afford to buy and uncertainty about the outlook for the economy, jobs and mortgage rates is putting pressure on sellers to give ground at the negotiating table.
In some markets, mainly in the South and West, homeowners who are eager to sell are more likely to give buyers a better deal. This could include a lower price, up-front money to nudge down the buyer’s mortgage rate, and funds for closing costs and any repairs or improvements that may pop up after the home inspection.
The reasons: Would-be buyers balk at what they view as unreasonable asking prices, while at the same time new construction is giving buyers more options and putting pressure on sellers to make their homes more appealing.
As a result, while the national median home listing price rose slightly in July, some metro areas saw a decline, signaling a reversal in the power dynamic between buyers and sellers. It’s rare to see the type of eye-popping bidding wars that exploded home values by roughly 50% nationally earlier this decade. Low-ball offers are more common.
Despite this hopeful trend, the housing market remains mired in a slump. Sales of previously occupied U.S. homes are running about 1.3% below where they were through the first seven months of last year, when they sank to their lowest level in nearly 30 years.
The national median home listing price rose slightly in July from a year earlier to $439,450, according to Realtor.com. The real estate listing company found the most a homebuyer who earns the median U.S. household income can afford to spend on a home is $298,000. The analysis assumes a 20% down payment and a 30-year mortgage at a fixed rate of 6.74%. By those criteria, 7 out of 10 home shoppers are priced out of the market.
Homes linger on the market as sales slow
The housing market has been in a rut since 2022, when mortgage rates began climbing from historic lows. The number of homes available for sale sank while prices kept rising.
Nationally, more homes are going on sale and remaining unsold longer because buyers have been unwilling or unable to make a deal. Active listings – a tally that encompasses all homes on the market except those pending a finalized sale – increased in July for the 21st month in a row, climbing nearly 25% from a year earlier, according to Realtor.com.
The tide turns slowly
The inventory of homes for sale across the U.S. has increased gradually as the market has slowed and is now at a level where supply and demand are more balanced. But in states like Texas and Florida, the number of homes on the market has climbed sharply, partly because those states are hotbeds of new home construction.
Home shoppers may now have more leverage relative to sellers in the South and West, where home inventory has risen in the single digits, compared to pre-pandemic levels. Conditions are tougher in markets in the Midwest and Northeast, where the supply of homes remains 40% and 50% below pre-pandemic levels, respectively, according to Realtor.com.
Sellers feel the pinch and budge on price
After roughly two months on the market and three open houses, Doug McCormick’s home has yet to receive a single offer.
The retired business owner and his wife initially listed the 4-bedroom, 4.5-bath house located in Evergreen, a mountain community about 30 miles west of Denver, for $1.3 million. They lowered their asking price to about $1.28 million. That, too, failed to bring in a buyer.
McCormick, 80, says he’s hoping mortgage rates ease a bit and bring out more buyers. But he’s also considering just renting the property.
“That’s something that’s kind of in the back of my mind,” he said. “I keep reminding myself you only need one buyer.”
McCormick’s situation is not unique. As demand has slowed, more sellers have resorted to lowering their initial asking price – often multiple times – to no avail.
“Even though we are seeing a substantial amount of price reductions, sometimes it’s not enough to move the home, it’s still sitting,” said Annie Foushee, an agent with Redfin in Denver.
The median home listing price in Austin fell 4.9% in July from a year earlier, while in Miami it dropped 4.7%. Among other metro areas that had sharp drops in their listing price were: Chicago (4.4%), Los Angeles (4.2%) and Denver (4%).