Share of homes with price drops reached a record-high in September
According to new Redfin research, signs continue to point toward a changing market that's letting U.S. homebuyers be more selective as supply constraints begin to ease in the hottest markets.
As a result, sellers are feeling compelled to adjust their expectations -- and their prices. In the four weeks ending on September 16, 26.6 percent of homes listed for sale had a price drop, the highest level on record since Redfin began tracking this metric in 2010. We define a price drop as a listing price reduction of more than 1 percent and less than 50 percent.
"After years of strong price growth and intense competition for homes, buyers are taking advantage of the market's easing pressure by being selective about which homes to offer on and how high to bid," said Taylor Marr, Redfin senior economist. "But there are some early signs of a softening market, and the increase in price drops may be another indicator that sellers are going to have trouble getting the prices, and the bidding wars, that they may have just months ago. Instead, many are finding their homes are sitting on the market without much interest until they start reducing their prices."
According to a Redfin analysis of all homes actively listed on the MLS for sale in the markets where Redfin operates during the four weeks ended September 16, 2018:
- The share of home-sellers who dropped their price increased 4.8 percentage points from the same period a year earlier, when 21.7% of homes had a price drop.
- The share of homes with price drops has been posting year-over-year gains consistently since late March.
- Las Vegas (+12.3 points to 28.1%), San Jose (+10.7 pts to 25.7%), Seattle (+10.1 pts to 37.1%), and Atlanta (+9.0 pts to 27.9%) were among the markets that posted the biggest year-over-year increases in the share of homes with price drops.
The Redfin Housing Demand Index -- a monthly indicator of homebuyer demand that was flat for the third consecutive month in July -- also suggests easing inventory is giving buyers more room to carefully consider their purchases.
"In a market where we're seeing more inventory, sellers may choose to use price reductions to continue to generate interest in their home for sale," said Jessie Culbert, a Redfin agent who works with sellers in Seattle. "Ultimately, the market dictates the appropriate price for any given home. We use data and on-the-ground insight to recommend the initial price, but sometimes we just need more exposure to the market, or more time to hear feedback, and then we'll work with our clients to adjust the price accordingly."