Home Sellers Lose Leverage as Inventory Gap Hits Record High

Buyers now hold the negotiating power as a record 630,000 more sellers than buyers exist nationwide. This imbalance is driven by high mortgage rates and economic uncertainty, which have sidelined prospective buyers. Housing supply is increasingly outpacing demand, leaving more than half of February listings sitting on the market for 60 days or more.

According to Redfin data, 34.2% of February home sellers reduced their list prices, the highest share for the month since records began in 2012. For those who made reductions, the average price cut was $40,915, or 7.3%. Across all February sellers, the average price reduction was $13,463, representing a 2.4% drop.

Price cuts are most frequent among sellers who have owned their homes for two years or less, at 37.4%, compared to 31.8% for those who have owned for seven years or more. Redfin notes that many recent buyers purchased at the pandemic peak and are now listing high to avoid going underwater, only to be forced to adjust to cooling conditions.

Geographically, the trend is most pronounced in the Sun Belt. Nine of the 10 major metropolitan areas with the highest share of price cuts were in Texas and Florida, where builders have added significant new housing supply. In San Antonio, 57.9% of February sellers lowered their prices, followed by Austin at 55.2% and Dallas at 47.3%. In contrast, only 7.4% of sellers in San Francisco dropped their prices.

In New York City, sellers who reduced their list prices did so by an average of $217,417. The average rate on a 30-year fixed mortgage was 6.37% as of April 9, down from 6.62% a year earlier.

Sellers in San Antonio lead the nation with a 57.9% price cut rate.