The number of homes available for sale has been increasing every month for nearly two years, giving buyers more choices in the market, according to a new report from Realtor.com.
In the South and West, the number of homes for sale has surpassed pre-COVID-19 levels, and inventory is still increasing in those areas. Housing inventory in the Northeast and Midwest has not yet recovered to pre-pandemic levels, and there remains a shortage of homes for sale.
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Slower sales and falling mortgage rates
Mortgage rates have also recently decreased, which typically encourages more buying activity. Despite cheaper borrowing costs, homes are taking longer to sell and buyer demand is not picking up significantly.
For the past year and a half, homes have been sitting unsold for longer periods, suggesting weaker buyer demand or overpriced listings, according to the report. The biggest slowdowns are happening in Florida and the Western states, where homes are taking much longer than average to sell.
Price cuts and buyer leverage vary by region
More homeowners have started slashing prices. About 20% of homes for sale have had their prices reduced after being listed. Most of these cuts are happening in the lower end of the market, where home prices range from $350,000 to $500,00. Overall, buyers now have more negotiating power than they did during the hot seller’s markets of the last few years.
This buyer leverage isn’t equal everywhere. It depends on the region, the price tier of the home and local market trends. Different parts of the country are seeing different patterns when it comes to price reductions on homes.
According to the report, in the Northeast, only 14% of homes for sale had their asking prices lowered in September. That’s relatively low, which suggests a stronger market. In the South and West, about 1 in 5 homes saw price reductions, which indicates weaker demand or greater supply, pushing sellers to cut prices more often.
In Denver, nearly 1 in 3 homes saw a price cut, which is the highest rate among large cities. This suggests that sellers there are struggling to get their original asking prices. Portland, Oregon, and Indianapolis, Indiana, are also experiencing high levels of price reductions, indicating softening conditions in those metro areas.
