Key facts
- Approximately 42% of U.S. housing listings have experienced price cuts.
- Median days on market have increased to 70 days from 63 days.
- The median home price has fallen to $439,900 from $449,000 in six weeks.
- Austin, Texas, has the highest share of price cuts among large metros at 52.5%.
- New construction in Houston is contributing to competition and price cuts.
- Insurance costs in Texas have significantly increased, leading to failed transactions.
The U.S. housing market is experiencing a shift towards a 'choice market' as price reductions become more prevalent due to rising inventory and longer selling times. Nationally, about 42% of listings have seen price cuts, a notable increase from the typical 30%-35% range. Inventory has grown by approximately 25,000 units since early August, and the median time homes spend on the market has climbed from 63 to 70 days. Consequently, the median home price has slipped by roughly $9,000 in six weeks, from $449,000 to $439,900.
Nimesh Patel, broker-owner of REMAX Fine Properties, noted that while buyers have more choices, it's not a complete buyer's market where they can dictate all terms. However, the increased selection has altered negotiation dynamics, with some buyers attempting offers significantly below list price. Patel described the current environment as more of a 'buyer's choice market,' particularly in Austin.
Specific markets are showing varied conditions. Houston has a median price of $370,000 with 4.6 months of inventory and 40.1% of listings with price cuts. Austin, however, leads large metros with 52.5% of listings seeing price cuts, four months of inventory, and a median price of $449,990. Patel attributed Austin's adjustment to rapid pandemic-era price growth, noting that sellers who bought at market peaks are now facing price corrections.
New construction is adding to competition in markets like Houston, as builders aim to move inventory planned before current market conditions. These builders are offering significant incentives, including paying for rate buy-downs, which Patel believes will continue to pressure the resale market.
Sellers are facing increased negotiating pressure, not only on price but also on post-inspection repairs, as buyers have multiple options. In Texas, rising insurance costs are also contributing to failed transactions. Patel advises sellers to make significant price reductions if initial marketing efforts do not yield desired activity, rather than small, incremental cuts.
Conversely, markets like Charleston, West Virginia, and Mansfield, Ohio, show much tighter supply with less than one month of inventory.