Sellers are giving pricing ground to homebuyers this summer but not all in the same way.
A new Movoto analysis of active listing data pulled on July 14 found that 35.4% of homes across 17 major metros were now being offered below their original asking price. In the Florida cities of Fort Lauderdale as well as West Palm Beach and Tacoma, Washington, the share was above 43%.
Mortgage lenders should know what happens at different points on the price ladder. Lower-priced homes are more likely to see a reduction, but higher priced homes tend to get a larger cut in the seller's ask.
In 16 of 17 metros, entry-level listings were the most likely to be cut, topping out at 49.3% of low-range listings in West Palm Beach, 49.0% in Tacoma and 48.5% in Fort Worth. But in 12 of those cities, the deepest cuts relative to asking price took place in higher markets. Median high-end markdowns hit $150,000 in both Orange County, California and the Long Island, New York counties of Nassau and Suffolk. Meanwhile, Rockingham County, New Hampshire, posted the steepest high-end concession at 8.6% of original ask.
"At the top, where asking prices are higher, a six-figure concession may be what it takes to attract qualified buyers," Movoto said in its analysis.
In Detroit, low-range homes not only were among the most frequently repriced but also took the deepest median percentage cuts in the analysis, at 10.7%. Fort Lauderdale's low-range listings had a median reduction of 8.8%.
Price reductions on active listings do not, on their own, mean homeowners are losing equity. An asking price is not the same as a property's market value or its eventual sale price. However, if reductions are accompanied by actual declines in closed-sale prices, they could weaken the collateral cushion for borrowers who purchased recently with small down payments.
Softening price asks at the entry level compresses the equity cushion on recent high loan-to-value ratio originations.
Seller concessions are the resale market's version of pressure builders have been applying for months through rate buydowns.
That backdrop matters because
For originators, that could make accurate purchase-price estimates crucial in markets where lower-priced listings are seeing frequent reductions. A borrower who qualifies based on an initial asking price may negotiate a lower rate. A borrower shopping on a tighter budget may encounter a different affordability picture depending on how much sellers are willing to negotiate.
