Home Sellers Feel the Squeeze as Buyers Gain the Upper Hand

By Elias DaSilva | August 30, 2024, 11:57 AM GMT+2

The U.S. housing market is changing in a way that is plausible to benefit potential homebuyers. As of July 2024, the report adds that nearly 18.9% of housing listings in the country experienced a price decrease, compared to 3.4% during the same period last year. 

Such figures show increasing strain on the overburdened lifestyles of home sellers, many of whom face more frustration in sending out ‘offers’ due to the description of a soaring mortgage market that keeps most buyers at bay. For those looking to buy, these changes may indicate a potentially better circumstance after a long period of increasing values. 

Without overlooking the existing affordability constraints, the latest wave of price reductions cuts the pessimism. The national average for new listing prices slightly dropped from $445,000 in June to $439,950 in July, although this number still seems unchanged from the same time. This small decrease implies that the volume will probably start adjusting to the low level of demand. 

High mortgage rates are one of the main reasons for this market adjustment. With interest rates remaining high, several buyers are opting to postpone their purchase, which continues to dampen demand. “Mortgage rates are still above what was thought, and that is responsible for the reduction in the number of buyers,” said McLaughlin, a senior economist at Realtor.com. “Several buyers may be waiting for lower rates that some analysts forecast in the coming months, which is compelling sellers to lower their prices to stimulate the market.” 

Among the major U.S. cities, Tampa, Florida, shows the highest increase in the number of price reductions compared to the same month last year. While the bikini-wearing segment of the population has been the center of attention in recent years, there has been some overheating of house prices, causing a decline in sales volumes. Moreover, in July, almost a third (30.6%) of home listings in the area had a price drop compared to 20.9% in the previous year. 

In a study of the 50 major metropolitan areas in the United States, Realtor.com found that compared to last year, only 3 cities did not increase the number of price reductions this year. This general pattern also illustrates the growing urgency among sellers to adjust their prices given the prevailing market conditions. 

“Sellers in several markets have had a good performance in raising prices,” commented McLaughlin. “However, as the effects of higher interest rates begin to bite deeper, they are being compelled to reassess their positions and cut prices.” 

Those who have mostly been on the sidelines waiting for a break in the market will wait no longer. During this time, such buyers will see further development of new markets, new opportunities.