Knowing that they have the upper hand thanks to current housing market conditions, more sellers are refusing to lower their prices, resulting in a lower-than-normal share of listings with a price cut.
Only 4.1% of homes on the market as of June 27 had a price reduction, compared to 5.6% at this period a year ago, according to a new Zillow analysis.
Typically, the share of listings with a price cut increases as the home-selling season continues, rising steadily from February to October. This year, however, price reductions plunged to 4% from February to March – the onset of the coronavirus pandemic – then falling to annual lows in April at 2.9%. Since then, more homeowners lowered their asking prices.
In April, 59% of sellers assumed COVID-19 would result in a buyers’ market, according to a Zillow survey. But high buyer demand, along with record-low housing supply, which is down 21% annually, has resulted in homes selling out at record pace and fewer price drops.
"This may be our strongest signal yet that sellers have the upper hand in the housing market today – and they know it," Zillow economist Jeff Tucker said. "Many buyers still think they can make lowball offers and score a great deal in the midst of today's economic turbulence, but sellers are holding firm on list prices. For-sale inventory has been setting new record lows this spring, so sellers know that buyers are starved for options. Despite the lack of price cuts, sellers are still able to sell their homes faster than they did this time last year."
The metros with the lowest share of listings with a price cut were New York (2.8%), Miami (3.3%), and Riverside (3.8%). On the flip side, Denver (9.1%), Indianapolis (7.4%), and Chicago (6.9%) have the largest share of price cuts.
The typical home value in the US increased 4.3% year over year to $251,598. However, Zillow forecasted a 1.8% decline in prices from April to October, with recovery through 2021.