Home price cuts hit September record

SALT LAKE CITY — The share of U.S. home sellers cutting prices just hit a new high for September.

More than 1 in 5 home sellers nationwide with active listings reduced their asking price during the four weeks that ended Sept. 20, according to a new analysis from the online real estate brokerage Redfin.

While the 21% share is only a slight increase from the same period last year, it's still the highest share of price cuts by home sellers since Redfin began tracking it at the start of 2022.

In September 2022, 18.8% of sellers decided to ask for less for their homes as interest rates began rising over the record lows that helped drive the COVID-19 pandemic-era homebuying frenzy.

That share fell nearly a percentage point for the same time period in 2023, but has been rising ever since, reaching 19.8% in September last year. Now, in what Redfin describes as the "strongest buyers market on record," the share of price cuts is ticking up again.

Why? A soft market usually forces more home sellers to slash prices. But Redfin said because price cuts have only become a bit more common, more homeowners are likely waiting to sell or even pulling their properties off the market rather than accept less.

Those sellers in the current market are apparently pricing their homes more realistically from the start, a shift away from the high expectations set during the pandemic. Then, homes sold quickly and prices skyrocketed as eager buyers raced to outbid each other.

"Those who sell their homes quickly are the ones who are getting savvier about pricing right from day one," Redfin senior economist Asad Khan said in a recent post.

"Sellers who price too high may be working off outdated comps, or feel overly optimistic about the chance of sparking a bidding war, despite data that says it's unlikely," Khan said. "Many are eventually cutting their price as they come to terms with reality."

That reality, he said, includes taking longer for homes to sell amid an uncertain economy and mortgage rates that have jumped from just under 6% shortly before the U.S. and Israel launched a war against Iran more than seven months ago to a weekly average of 7.28% as of Oct. 1.

Denver had the biggest share of price cuts in the four weeks ending Sept. 20, at just under 31%, followed by Indianapolis, at just under 30%. Both are seen by Redfin as "less-strong" markets for buyers where sellers "are still adjusting their expectations."

The next highest shares among the nation's 50 most populated metropolitan areas, a list that does not include any place in Utah, were San Antonio, at 26.8%; Dallas, at 26.6%; and Austin, at 26.1%.

The Texas cities are considered three of the nation's strongest buyer's markets, with more than twice as many sellers as buyers, Redfin said.

Sellers are sticking to their asking prices the most in San Francisco, where the share of price cuts for the September time period was less than 10%. The Bay Area city is currently experiencing what's being called a "mansion shortage" for wealthy buyers.

The other top 5 markets where the fewest sellers are reducing home prices are Newark, New Jersey, at 12.2%, which, like San Francisco, is considered a strong sellers' market; followed by Chicago, at 13.3%; New York, at 13.6%; and Miami, at 13.7%.

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