5 cities where sellers are more likely to cut prices

Close to one-fifth of homes for sale had list prices slashed in February, doubling the rate in the span of 12 months, according to new data from Realtor.com.

More than 18% of listings had price cuts in February compared to approximately 9% one year ago. The limits that rising interest rates and inflation have placed on home buyer affordability appeared to particularly impact sellers in Western Sun Belt cities, where prices surged the most between 2020 and early 2022. Smaller metropolitan areas in the Northeast and Midwest were less likely to see reductions in asking prices, Realtor.com said.   

"A price reduction means the sellers are coming into the market optimistic, but the buyers aren't meeting them there," said Hannah Jones, economic research analyst at Realtor.com.

The rapid jump in mortgage rates over the past year — with the current benchmark 30-year up by more than 2% on an annual basis and over 3% higher than at the start of 2022 — have resulted in many hopeful buyers unable to afford homes at existing price levels. Those concerns helped drive the pace of price reductions upward in markets considered boomtowns just months ago, such as Austin, Texas, and Phoenix.

Also, in the past week, Redfin issued a new analysis similarly finding a concentration of housing markets in the West cooling the fastest in the last year, based on the difference in prices from final sale versus the original listing, in deals worked by its agents. Overlap at the top of Realtor.com's and Redfin's lists were common. with Austin and Phoenix high on both. But major technology centers, in addition to warmer Sun Belt cities, also figured prominently in Redfin's report, with Seattle and Denver both landing in the top five. Recent troubles roiling the technology industry is dampening demand.  

According to new analysis from the Bank of America Institute, median mortgage payments nationally increased 7% year over year as well. But variations existed on a regional basis, with several Sun Belt metropolitan areas picking up the rate by more than 10%. Median payment amounts were determined based on a rolling six-month average. 

"People across the United States continue to feel the squeeze from higher housing costs but the impact is uneven between regions," said Anna Zhou, economist for the Bank of America Institute. 

Realtor.com's findings reflect a continuation of a trend that started gaining steam in spring 2022, when Redfin found approximately 20% of its listings had reductions compared with just a few weeks earlier. More recently, the digital real estate brokerage also noted the increased number of concessions currently offered to buyers, sometimes along with lower prices. 

According to Realtor.com, the following five cities experienced some of the highest rates of price cuts among for-sale homes in February across the country.

Austin, Texas
Austin, Texas.

Austin, Texas

Share of listings with a price reduction: 25.4%
Median February list price: $532,500

Austin saw waves of new residents arrive in the initial stages of the pandemic, but as the influx slows, homes are sitting on the market longer, Realtor.com said. Meanwhile, a surplus of newly built properties also exists. Bank of America determined mortgage payments surged 14% annually in February as well.
NMN041018-phoenix.jpg
Downtown Phoenix, Arizona.

Phoenix

Share of listings with a price reduction: 24.6%
Median February list price: $487,000

Prices climbed quickly in Phoenix during the pandemic but fell 3% in February year-over-year, and 8% from mid 2022 levels. Based on Bank of America's analysis, mortgage payments increased 10% on an annual basis.
Port St. Lucie is a city on the Atlantic coast of southern Flori

Port St. Lucie, Florida

Share of listings with a price reduction: 23%
Median February list price: $450,000

Approximately one hour north of Palm Beach, Florida, Port St. Lucie's population has grown by more than double in 30 years, according to U.S. Census Bureau data. While nearly a quarter of sellers reduced their asking price last month, home prices are still up by almost 8% from last February.
Huntsville, Ala.
An aerial view of the downtown area of the city of Huntsville, Alabama.

Huntsville, Alabama

Share of listings with a price reduction: 22%
Median February list price: $394,175

Several aerospace and defense-related businesses have opened offices in Huntsville in recent years, providing a source of home buyers for the Northern Alabama city. While prices have also  historically been below the national average, they have come down by 9% since mid 2022.
las-vegas-fotolia.jpg

Las Vegas

Share of listings with a price reduction: 21.9%
Median February list price: $445,500

Following the housing crash that decimated the local market, prices rose again in Las Vegas, with the median eventually approaching $500,000 by early 2022. But in the past year, it has come down by over 10%.
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