According to new data released by Redfin, nationwide, 21% of home sellers dropped their asking prices in July — the highest share since the firm began tracking the metric in 2012. The shares of homes with price drops in July compared to one year ago increased in 94 of 97 metro areas surveyed.
The trend was worst in boomtowns like Boise, Idaho, where 70% of homes for sale dropped their asking price in July. Other markets, including Denver, where 58% of home prices dropped and Salt Lake City with a 54.8 share of cuts, were hit almost as hard.
“Individual home sellers and builders were both quick to drop their prices early this summer, mostly because they had unrealistic expectations of both price and timelines,” said Shauna Pendleton, a Boise Redfin agent. “They priced too high because their neighbor’s home sold for an exorbitant price a few months ago, and expected to receive multiple offers the first weekend because they heard stories about that happening.”
While sellers are reducing their home prices, Stephanie Grable, a realtor with Keller Williams in Salt Lake City, said they’re still consistently selling homes.
“We’re still selling more than we sold in 2021. So our average home sale was about $440,000 in 2021, and we’re about $540,000 in 2022,” Grable said. “So what we’re seeing is just the overpricing is reducing, we’re going into more of a stable, healthy market.”
Sellers and builders had ambitious expectations during the pandemic. Grable said she’s also seen builders reduce prices and find alternative incentives for buyers.
“We are seeing some price reductions with the builders as well, that are actually getting a little bit creative and offering more incentives to the buyer,” Grable explained. “So, maybe not reducing their prices greatly, but offering money toward buy-downs or toward buyers’ closing costs.”
This year, mortgage rates have surged above 5%, which has complicated affordability for potential buyers who are battling the effects of inflation on their expenses as well as high home prices. Currently, the average rate on a 30-year fixed mortgage is 5.81%, Forbes Advisor reported.
Other cities including Tacoma, Washington, Tampa, Florida, Sacramento, California, Indianapolis and Phoenix have a share of home price cuts above 50%, Redfin reported.
Overall, Redfin data shows that home sales fell by 19.3% in July compared to one year earlier. Activity reached its lowest point since the start of the pandemic.
Despite what seems like high prices for buyers, Grable said it’s actually a great time to buy.
“We’re telling all of our sellers and buyers that if there’s any great time to buy and sell it’s right now. Our sellers can sell and our buyers can buy. Still in this market, our inventory is up,” Grable said.
She continued: “In the last two years, we’re running about a one- to two-month inventory supply. We’re about five months now. So we’re at the tail end of a seller’s market and entering into a neutral market, which gives buyers the opportunity to come and enter the market and get a home.”