Home Price Cuts Surge To 18-Month High In Rate-Sensitive Market

As high mortgage rates continue to influence the housing market, an increase in home sellers reducing their asking prices marks the highest level of price cuts in 18 months.

Amid market adjustments, the median sale price still hit a record high this week, according to a Redfin report, pushing more potential buyers out of the market. With 6.4% of listings nationwide seeing price reductions — the most since November 2022 — and the median asking price dropping by roughly $3,000 last week, experts predict a potential softening in sale-price growth.

The shift comes as high borrowing costs persist, complicating the buying process and possibly leading to a longer-term market cool-down.

While the median asking price slightly declined, the median home sale price continued to climb, reflecting a 4.3% increase year-over-year, reaching $390,613 — an all-time high. The increase comes even as the average age of inventory extended to 46 days, up from previous months, indicating homes are staying on the market longer before being sold.

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That gradual buildup in inventory age and the recent drop in asking prices suggest a potential shift toward a buyer’s market, yet high historical prices still dominate the landscape, making affordability a challenge for many.

"The market is slower than usual, but well-maintained properties listed for under a million dollars still get multiple offers," Christine Chang, a Redfin agent in California's Bay Area, said in the report.

Housing payments decreased, providing some relief for homebuyers. The typical monthly housing payment fell to $2,812, marking its lowest level in six weeks.

The reduction is attributed to a slight dip in mortgage rates, with the weekly average mortgage rate dropping below 7% for the first time since early April to 6.94%. However, the report said any relief might be short-lived as mortgage rates began to tick upward again following disappointing results from recent treasury auctions.

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On the demand side, pending home sales saw a decline of 3.4% compared to the same period last year, aligning with the slowdown seen over the past month. The downturn in pending sales is paralleled by a near six-month low in mortgage-purchase applications, which decreased by 10% year-over-year.

Despite a 7.8% increase in new listings compared to last year, the pace of listing growth has been waning over the past few months, aggravating the challenge for buyers with fewer options than usual for this time of year.

"People who are buying right now are typically doing so because they're having a baby or looking for a more family-friendly home," Chang noted. "My advice for those buyers is to be open-minded: Consider single-family homes that are a bit outdated but don't need major renovations, and/or homes in lesser-known, non-trendy neighborhoods. That type of home tends to sit on the market longer, and buyers may be able to avoid competition and get a home for asking price instead of engaging in a bidding war."

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