Housing market slowdown is forcing sellers to adjust prices as buyers push for better deals
For the first time in nearly two years, homebuyers are negotiating larger price reductions as homes sell for below asking price in many US markets.
A new report from Redfin shows that the typical home is selling for 1.8% less than its original list price, marking the biggest discount since 2022.
The slowdown in market activity is giving buyers more leverage, with homes staying on the market longer. In January, the average home took 56 days to go under contract, the longest period in nearly five years.
Additionally, more than half of all listings (56%) remained on the market for at least 60 days, reflecting a shift from the hyper-competitive housing market of previous years.
While this trend isn’t ideal for sellers, it provides much-needed relief for buyers who have been navigating high home prices, steep borrowing costs, and tight inventory. However, not all homes are seeing price reductions. In highly sought-after areas, particularly where inventory remains limited, some properties are still selling for above asking price.
Market slowdown gives buyers an edge
Affordability continues to be a major challenge for buyers, with the average 30-year mortgage rate at 6.96% in January. While that’s lower than the two-decade high of 7.62% recorded in 2023, it remains well above the 3% to 5% rates seen before and during the pandemic.
At the same time, home prices have continued to rise, with the median sale price up 4% year over year. The combination of elevated mortgage rates and rising home values has pushed the typical homebuyer’s monthly payment to near-record highs.
The upside of a slower market is that buyers now have an opportunity to negotiate both price and terms. Redfin agents in some regions report that sellers of homes that have been on the market for a few weeks are increasingly willing to lower their prices or offer concessions. However, not all listings present a good deal.
According to Redfin Premier agent Charles Wheeler, the growing pool of unsold inventory doesn’t always mean buyers have more desirable homes to choose from.
“More listings are hitting the market, but they’re not always the type of home buyers want and need,” Wheeler said in Redfin’s report. “The listings lingering on the market tend to be in unpopular neighborhoods or require renovation. Relatively affordable, move-in ready homes close to highly rated schools are selling quickly, often with multiple offers.”
Florida leads in home price discounts
Among the 50 largest metro areas in the US, Florida is seeing the most significant price cuts. Homes in West Palm Beach, Fort Lauderdale, and Miami are selling for about 5% below their asking price, the biggest discounts in the country.
In Tampa and Jacksonville, typical sales prices are roughly 4% under asking price, a larger discount than during the same period last year.
Florida’s housing market has faced several headwinds, including concerns over natural disasters, rising home insurance costs, and higher property taxes. These factors have led some potential buyers to delay purchases, creating a slower market where sellers are more likely to accept offers below asking price.
While many areas are seeing price reductions, some metros continue to experience strong competition, with homes selling above list price. The Bay Area leads the nation in over-asking sales, with San Jose homes selling for roughly 3% above asking price, followed by Newark, NJ (2.5%), San Francisco (2.5%), Oakland (1%), and Nassau County, NY (0.5%).
These markets remain competitive due to low housing supply and strong demand, making it difficult for buyers to find price cuts in high-demand areas.
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Longer listing times have become more common in several cities, particularly in Florida. Miami and Pittsburgh currently have the highest share of unsold homes, with 63% of listings remaining on the market for at least 60 days. Other metro areas with a high percentage of lingering listings include San Antonio (62%), Fort Lauderdale (61%), and West Palm Beach (60%).
In contrast, San Jose, Oakland, and San Francisco have some of the fastest-moving inventory, with only about one-third of listings remaining unsold after 60 days.
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