Money Research Collective’s editorial team solely created this content. Opinions are their own, but compensation and in-depth research determine where and how companies may appear. Many featured companies advertise with us. How we make money.
The Share of Homes for Sale With Price Cuts Hit a 6-Year High
By Pete Grieve MONEY RESEARCH COLLECTIVE
Over 22% of home listings got a price cut in April, up from 17% the year before.
Homebuyers accustomed to seeing prices going higher and higher are finally getting some relief. The share of home listings with price cuts climbed to a six-year high last month, likely due to weaker demand as a result of high mortgage rates.
In April, 22.4% of home listings had price cuts, a 1.9 percentage point jump from a month prior and an increase from 17.2% in April 2023, according to a new Zillow report.
It’s unusual for so many home sellers to cut their listing prices at this time of year when the housing market is often in overdrive, Skylar Olsen, chief economist at Zillow, said in the report.
Find your actual rate at Rocket Mortgage (NMLS #3030) Today!
View RatesThe increase in price cuts comes as sellers have been entering the market at a faster rate than buyers so far this spring homebuying season.
The inventory of homes for sale is still about 36% lower than the pre-pandemic level, but the number of active listings increased 6.4% in April compared to the previous month, according to Zillow’s data.
Meanwhile, mortgage rates surged past 7% in mid-April for the first time in 2024 after inflation data came in hotter than expected, causing buyers to sit back and wait for better financing opportunities.
“The market coasted off of the speed built up in the first three months of the year. Home values continued to grow, but more slowly than the seasonal norm, and the speed of sales fell behind last year’s pace,” Olsen said.
Home values remain high
Unfortunately for buyers, despite a larger share of listings with price cuts, home values are at a record high. Based on Zillow’s index that estimates what existing homes are worth, the typical home value was $359,000 in April. That’s a 4.4% increase from level a year ago of $344,000.
Because mortgage rates have soared, the typical monthly payment of $1,908 is up even more in the past year: 11.6%.
Olsen says recent price cuts from sellers could be a sign of “softer price growth ahead” amid weaker demand. However, there’s an alternative explanation, which is that the increase in price cuts is more related to sellers going through a “feeling out process.” Sellers may be adjusting prices more frequently because it’s a complicated real estate environment and some owners have simply initially listed at an unrealistically high asking price.
“The latter scenario becomes more likely in a rapidly changing market like we see today, with relatively few recent sales to compare against,” Olsen said.
More from Money:
8 Best Mortgage Lenders of May 2024
When Will the Fed Cut Rates? Cooling Inflation Builds Hope for September
Why People Are Giving up on Buying Vacation Homes
Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.