Record Share of Home Sellers Cut Listing Prices in February: Report

A record share of home sellers cut their listing prices in February as competition for homebuyers necessitated steep price reductions, according to an April 9 report by real estate platform Redfin.

About 34.2 percent of sellers reduced their listing prices in February, up from 31.5 percent in the same month a year earlier, according to Redfin’s analysis of multiple listing service data. That was the highest February share since the firm began tracking multiple listing service records in 2012.

The sellers who cut their listing prices reduced them by an average of $40,915, Redfin said. That amounts to a 7.3 percent cut, the highest for any February since 2023.

Final sales prices could include further reductions because of negotiations on such items as closing costs, contingency fees, and other contractual stipulations.

“Price cuts are on the rise because it’s a buyer’s market,” Redfin said in an April 9 statement.

“There are hundreds of thousands more home sellers in the market than buyers because buyers have been spooked by high mortgage rates, high prices and economic uncertainty. When sellers outnumber buyers, buyers can often negotiate on price because they have a lot of options to choose from.”

In markets flush with new housing inventory, the number of sellers who slashed their listing prices was far more pronounced. Nearly 60 percent of sellers in San Antonio lowered their listing prices in February, Redfin reported, while slightly more than 55 percent of sellers in Austin, Texas, initiated price cuts, followed by Dallas (47.3 percent), Tampa, Florida (45.9 percent), and Fort Lauderdale, Florida (44.9 percent).

Homebuilding in Texas and Florida has begun to cool after years of growth and cyclical overbuilding, the National Association of Realtors reported earlier this year. In Florida, home prices are being affected by rising insurance costs related to natural disasters, while condominium homeowners association fees have skyrocketed because of new safety regulations on older buildings more than three stories tall.

Conversely, sellers were far less likely to reduce prices in markets in which housing inventory is limited. A little more than 7 percent of sellers in San Francisco reduced their listing prices in February, with 11.1 percent of sellers in San Jose, California, following suit. In Newark, New Jersey, about 13 percent of sellers dropped their listing prices.

Sellers who have been in their homes longer and have higher amounts of equity were less inclined to drop their sales prices, Redfin’s analysts noted.

“Many people … bought during the peak of the pandemic market when home prices were soaring,” Redfin said in its statement.

“In a lot of areas, prices have since come down, meaning sellers are at risk of being underwater. Many of these sellers price high initially in an attempt to recoup their investment, only to find they must lower their expectations because the market has adjusted.”

Sales of existing homes rose by 1.7 percent in February from January to a seasonally adjusted annual rate of 4.09 million, according to the National Association of Realtors. However, sales were down by 1.4 percent year over year.