One in three single-family homes listed for sale in the U.S. housing market had taken a price cut in January, in what real estate analyst Mike Simonsen described on X, formerly Twitter, as a "very unusual" phenomenon for the first month of the year.
"About 33.1 percent of the homes on the market have taken a price cut from the original list price. That's up from 33 percent last week," Simonsen, founder and president of real estate analytics firm Altos, wrote in a piece for Housing Wire published on Monday. "It's a pretty small move, but it's in the wrong direction."
Why It Matters
The U.S. housing market is undergoing an affordability crunch triggered by historically low inventory, skyrocketing home prices, and stubbornly high mortgage rates, which are still hovering around the 7 percent mark, despite recent rate cuts by the Federal Reserve.
As aspiring homebuyers remain cautious about getting on the property ladder, sellers across the country are increasingly trying to meet them where they are at, slashing listed prices for their properties. Despite growing inventory and widespread price cuts, home prices are still rising at the national level, giving little respite to buyers.
What To Know
Sellers slashed prices during what is normally considered a busy time of the year for the housing market because of weak demand, Simonsen said. Crushed by high mortgage rates and still-rising prices, buyers are waiting on the sidelines of the market for better times to come, forcing sellers to try to attract them with price reductions.
"Almost always this early in the year, price cuts are declining," Simonsen wrote. "Normally, fewer folks need to cut their prices in the spring. At this time of year, there's new inventory, and new buyers are shopping. In recent weeks, we can see that those buyers are waiting," he added.
"Sellers who don't get an offer may choose to cut their price. So, normally, there would be fewer price reductions at this time of year. But, this week, price reductions ticked up."
Notably, according to Simonsen, this is "the first instance of an uptick in price reductions in January in over 10 years."
Recent data from Realtor.com confirms that an increasing number of homes for sale in the U.S. had their listed price slashed in January. According to the platform, 15.6 percent of listings had price cuts last month, up 14.7 percent compared to January 2024.
The share of price cuts was higher than any January in Realtor.com's records other than in 2023, "when rising rates began to slow the market, and in 2019, when the market was also softer due to relatively higher rates at the time," Realtor.com wrote.
Despite widespread cuts, the median price of the newly pending single-family home sales in the U.S. in January was $389,700, according to Altos data, up 2.5 percent compared to a year earlier. The median price of the active market was $424,900, unchanged from last year, Simonsen reported.
Even though prices are still rising, the pace of their growth has slowed down significantly, Simonsen said. "Any way you slice it, home prices are basically flat from a year ago," he wrote on X.
What Happens Next
According to Realtor.com, the high share of price cuts in the U.S. housing market "could signal further price softening in the coming months." Simonsen expects this trend to continue "until mortgage prices come back down."
fairness meter
About the writer
Giulia Carbonaro is a Newsweek Reporter based in London, U.K. Her focus is on U.S. and European politics, global affairs ... Read more