A new report finds that homebuyers are receiving some of the steepest price discounts on record as sellers adjust their expectations.
Zillow found that the typical listing in the U.S. had $25,000 in cumulative price cuts in October, which matched the largest discounts the company has ever recorded.
The typical size of an individual price cut is little changed from recent years at around $10,000 – but the report noted that sellers are adjusting their sales prices more frequently with listings taking longer to move. The share of listings with price cuts is 26.9% of all U.S. listings, according to the report.
“Most homeowners have seen their home values soar over the past several years, which gives them the flexibility for a price cut or two while still walking away with a profit,” said Zillow senior economist Kara Ng.
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“These discounts are bringing more listings in line with buyers’ budgets, and helping fuel the most active housing market in three years,” Ng said. “Patient buyers are reaping the rewards as the market continues to rebalance.”
Zillow noted that the areas with the largest median discounts from the initial listing price were located in some of the most expensive housing markets in the country.
Cuts by sellers in San Jose amounted to a median $70,900 cumulative discount, the largest of all markets.
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Other metro areas in California saw sizable median reductions of $61,000 in Los Angeles, $59,001 in San Francisco and $50,000 in San Diego – while New York City also saw a median cumulative price cut of $50,000.
In some metro areas, home sellers haven’t had as much flexibility to reduce prices. The smallest cumulative median price discounts in October were in Oklahoma City ($15,000), Louisville ($15,000), St. Louis ($15,100), Indianapolis ($16,000) and Detroit ($17,100).
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Aside from Oklahoma City, those metro areas are seeing homes sell faster than the national average and listings tend to be newer, which indicates there is steady demand and sellers don’t need to make deep price cuts to attract a buyer.
Markets which had less costly homes to begin with tended to have bigger relative discounts for buyers. Pittsburgh had a typical $20,000 markdown with about 9% of the metro’s typical home value, which was the largest relative discount among major markets in Zillow’s report.
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New Orleans also had a discount of about 9% relative to the typical home value in the market, while buyers saw similarly sized price cuts in Austin (8.4%), Houston (8.2%) and San Antonio (7.9%).
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