Good news for homebuyers: Sellers are beginning to cut prices

Since home prices surged during the pandemic, along with mortgage rates, buyers have hoped for a housing market “crash” to make their purchase more affordable. But prices have continued to inch higher, even in the face of slowing sales.

Now, however, there are increasing signs that prices are starting to shift in buyers’ favor – not anything close to a “crash” but enough to make a difference. In its February Monthly Housing Report, Realtor.com found the percentage of listed homes with price reductions climbed to 16.8%, a notable increase from 14.6% in February 2024.

This adjustment comes alongside a surge in seller activity. The number of newly listed homes rose by 4.2% year-over-year, marking the highest February activity since 2021. 

"While rates remain elevated, we are beginning to see green shoots in the market as sellers grow tired of waiting for significant changes in interest and mortgage rates," Danielle Hale, chief economist at Realtor.com, said in a press release. "If these trends continue, we could see a more balanced market with rising inventory and a potential slowdown in price growth."

In February, the median home listing price dipped below last year's level to $412,000. That doesn’t necessarily mean sellers are lowering the price – Realtor.com said it is partly attributed to a greater number of smaller homes being listed.

Federal employment uncertainty and the housing market

Despite concerns about the impact of federal employment uncertainty on housing markets, the report indicates no immediate correlation between markets with significant government workforces and those experiencing slowdowns. However, Realtor.com emphasizes that this doesn't rule out future effects, as the impact of workforce changes may take time to materialize.

In the Washington, D.C., area, which has a large federal presence, price reductions have increased, aligning with the national trend. While the D.C. market is showing signs of adjustment, it’s currently in line with national averages. However, the consistent rise in price reductions throughout February suggests a potential for more significant changes as the spring market progresses.

Homes are also staying on the market longer compared to last year, with an average of 66 days in February. That’s another encouraging trend for buyers.

This marks the 11th consecutive month of year-over-year increases in time on market. However, homes are still selling faster than pre-pandemic averages. The South and Midwest regions saw the most significant increases in time on market.