Fewer Sellers Drop Asking Prices in Tight Housing Market!
JANUARY 12, 2021
The number of listing price cuts flatlined Feb. to March at around 4% because some sellers expected a buyers’ market to appear – but they dropped to 2.9% in April.
NEW YORK – In yet another sign that home sellers have the advantage in the current housing market, a Zillow analysis shows the share of listings with a price cut is down compared to last year. Only 4.1% of homes on the market as of June 27 had a price cut, compared to 5.6% at the same time last year.
Typically the share of listings with a price cut increases as the home selling season continues, rising steadily from February to October. Last year, however, price cuts flatlined from February to March, with around 4% of listings offering a price cut – atypical behavior compared to previous years – and then dropped to annual lows in April at 2.9%. Since then, more homes saw price cuts, though the share remains well below what would be expected in a normal year.
A Zillow survey in April showed the majority of sellers (59%) assumed the coronavirus pandemic would result in a buyers’ market. But high buyer demand coupled with extremely tight inventory (down 21% YoY) resulted in homes flying off the market at record pace and fewer price cuts.
“This may be our strongest signal yet that sellers have the upper hand in the housing market today – and they know it,” said Jeff Tucker, economist at Zillow. “Many buyers still think they can make lowball offers and score a great deal in the midst of today’s economic turbulence, but sellers are holding firm on list prices. For-sale inventory has been setting new record lows this spring, so sellers know that buyers are starved for options. Despite the lack of price cuts, sellers are still able to sell their homes faster than they did this time last year.”
Out of the 50 largest U.S. metropolitan areas, New York (2.8%), Miami (3.3%) and Riverside (3.8%) have the lowest share of listings with a price cut – with New York’s level lower than what’s normally seen in December. However, those shopping in Denver (9.1%), Indianapolis (7.4%), and Chicago (6.9%) will see the largest share of price cuts.
The typical home value in the U.S. is $251,598 up 4.3% compared to a year ago. Zillow’s most recent home price forecast expects a slight 1.8% drop in prices from April to October 2020, with recovery through 2021.
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