Housing Market Update: Price Cuts Are In, Bidding Wars Are Out
Homebuyers, rejoice: Price cuts are popping up on more houses for sale across the U.S., offering long-awaited relief following two years of fierce competition.
Data released last week by the real estate brokerage Redfin shows more than 15% of home sellers dropped their asking price in nearly 100 big cities, with price cuts especially likely in spots that were hot housing markets during the pandemic. In the eight cities topping the list, more than half of homes for sale saw price cuts in July.
The findings go hand in hand with the slow disappearance of bidding wars, which have plagued homebuyers during the housing boom, and a general cooling off of the housing market.
Redfin reported that 44.3% of home sale offers written by the company’s agents faced a bidding war — meaning a home gets more than one competitive offer — in July. That's the lowest bidding war rate since homebuyers flooded the market in the early months of the COVID-19 pandemic.
More price cuts on homes for sale
The number of homes for sale with price drops spiked in July. All 97 metropolitan areas in the Redfin analysis saw at least 15% of homes for sale slashed their asking prices, including 27 cities that had 40% or more homes on the market with price cuts.
Redfin pointed to several reasons for the price-cutting trend, including the steep rise in mortgage rates, an increase in inventory and the fact that buyers seem to anticipate there will be better deals ahead. Sellers may have also simply gotten greedy and set their prices too high for what the current market will bear.
“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,” Boise Redfin agent Shauna Pendleton said in a statement. “They priced too high because their neighbor’s home sold for an exorbitant price a few months ago, and [they] expected to receive multiple offers the first weekend because they heard stories about that happening.”
These 10 cities saw the highest share of home price decreases in July, according to Redfin:
- Boise, Idaho (69.7%)
- Denver, Colorado (58%)
- Salt Lake City, Utah (56.4%)
- Tacoma, Washington (54.8%)
- Tampa, Florida (52.1%)
- Sacramento, California (52%)
- Indianapolis, Indiana (51.4%)
- Phoenix, Arizona (50.1%)
- San Diego, California (49.7%)
- Portland, Oregon (48.3%)
A recent report from Realtor.com also showed how common price reductions are becoming nationally. The share of homes for sale with price cuts throughout the U.S. was 19.1% in July, compared to 9.4% the same month a year ago.
Bygone bidding wars
Until recently, bidding wars all but defined the home-buying experience since 2020. That summer marked a steep increase in buyers facing competing bids, and earlier this year roughly two-thirds of homes for sale received multiple offers.
By this June, the national bidding-war rate was down to 51.5%, according to Redfin, compared to 62.5% the previous month and 66.7% in June 2021. And bidding wars occurred on only 44% of homes in July.
“While the market is cooling, it’s not coming to a crashing halt,” Shoshana Godwin, a Seattle-based Redfin real estate agent, said in a news release. “House hunters who can still afford to buy should consider taking advantage of the slowdown given that there’s way less competition.”
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