Warning signs in the housing market push sellers to cut prices: 'It makes no sense'

Homeowners across the United States who are trying to sell are increasingly being forced to trim their asking prices and keep their listings active for long periods, according to a new report.

The sluggish market is leaving many sellers in a holding pattern, unable to move for a job, purchase a larger home for a growing family, or make other major life changes that depend on selling first.

Many sellers who can afford to take their homes off the market are choosing that route.

Those who remain listed are under growing pressure to cut prices and even offer thousands of dollars toward buyers' expenses, real estate agents said.

The shift is a sharp reversal from earlier in the decade, when low mortgage rates helped fuel a buying spree and many sellers received offers well above their list prices.

Now, higher mortgage rates, years of rising home values, and a weaker economic outlook shaped by persistent inflation have slowed the market.

As a result, homeownership is out of reach for many would-be buyers, while others are waiting for conditions to improve before making a move.

Sellers now outnumber buyers, forcing homeowners to choose between deeper price cuts and concessions or waiting longer and putting important life plans on hold.

“The dynamic has shifted back toward more of what we call buyers' markets rather than sellers' markets,” said Mark Fleming, chief economist at First American Financial.

“That means you might have to reduce your price, you might give a concession to get your home sold, it might have to stay on market longer.”

Liz Suder, whose three children no longer live at home, decided to sell her four-bedroom, 3.5-bath house in Murphy, Texas, about 20 miles outside Dallas, and move into something smaller.

“I was waiting to sell the house before I started looking,” said Suder, 56. “I didn't want to have two mortgages.”

The finance director ended up putting her plans on hold for more than a year. After owning the home for 21 years, she first listed it for $750,000, then lowered the price several times, but it still did not sell. She eventually pulled it from the market.

She later relisted the property for $725,000 ahead of the spring homebuying season, but only recently did a buyer agree to purchase it for $650,000. Suder also agreed to contribute $9,000 toward repairs.

“I never expected it to take a full year, and for me to have to reduce the price by that much,” she said.

Rick Ganga is also waiting for a sale before he can move ahead with the next phase of his life.

Ganga, who is going through a divorce, needs to sell his home in Blaine, Washington, before proceeding. The three-bedroom, 2.5-bath house went on the market for $825,000 and has had several showings, but lowering the price to just under $800,000 has not helped.

“There’s been no offers, virtually zero traffic,” said Ganga, 58.

He said some neighbors have cut asking prices by $100,000 or more, but since he has owned the home only since 2022, he has not built up enough equity to go much lower.

“That’s not anything I’m going to entertain,” he said. “It doesn't make sense.”

Until the house sells, the operations manager cannot move ahead with plans to transfer with his company to another state.

“I honestly believe that it will probably sit until spring or summer of next year,” he said.

After briefly dipping below six percent earlier in the year, the average rate on a 30-year mortgage climbed to as high as 7.4 percent recently, the highest level in nearly three years. That rise has weighed heavily on U.S. home sales.

As more sellers reduce prices, the national median home listing price fell from a year earlier for the 11th straight month, dropping 1.2 percent to $419,250, according to Realtor.com. Roughly 21 percent of listings had an initial price cut, the highest share in four years.

Buyers commonly ask sellers for help with closing costs, and higher mortgage rates are also giving them leverage to request money to buy down their rate for several years or for the full life of the loan.

“It's sort of like an indicator of where the market is right now, with buyers gaining leverage at the expense of sellers, and sellers doing more now to meet buyers halfway,” said Jake Krimmel, a senior economist at Realtor.com.

That may be encouraging for buyers, but it still may not be enough to solve the affordability problems that are keeping many people out of the market.

There were about 63 percent more sellers than buyers across the 50 largest U.S. metro areas recently, according to Redfin.

The number of buyers, at roughly 929,000, was the lowest on record going back to 2013, while the number of sellers climbed to its highest level since 2020.

That wide gap could mean a longer wait for Ethan Butner, who is trying to sell his home in Troutdale, Oregon, about 16 miles east of Portland.

Butner, a service manager, already has an accepted offer on a larger home near Portland for his family, but first he must sell his current three-bathroom, two-bath house so he can use the proceeds.

So far, that has been difficult. The home has been on the market for more than two months at $480,000, and after he cut $30,000 from the asking price, he received only one offer, which later fell through.

Butner recently installed a new hot water heater and dishwasher and replaced the flooring in hopes of making the home more appealing.

“It's been a roller coaster of emotion for myself, my family, especially my fiancée,” said Butner, 36. “We’ve had this vision of being in our own home and all the kids having their own rooms and all the good stuff that comes along with that. We definitely feel stuck at the moment.”