Home sellers have begun cutting back their listing price, especially at the high end of the housing market, leaving open the possibility that it is now beginning to shift to a buyer’s market.
About 14.2% of all homes listed for sale on Zillow saw a price cut in June, up from a recent low of 11.7% at the end of 2016, according to new data released by the company. This is also up from 13.4% in June 2017.
From the beginning of this year, the share of listings with a price cut increased by 1.2 percentage points, the greatest January-to-June increase ever reported and more than double the increase from the same period last year, according to the report.
And in some markets, the numbers were even higher. For example, in San Diego, 20% of listings had a price cut in June, up from 12% last year.
Seattle also saw an increase in its number of homes with a price cut to 12% of total listings in June. This represents the city’s greatest share since October 2014.
While home prices continue to rise across the U.S., that growth is beginning to slow. Zillow’s data shows home values rose 8.3% over the past year to $217,300, but the company forecasts that growth will slow to about 6.6% over the next year.
But this increase is coming from the top end of the market, rather than starter homes, where real relief is needed. The data shows that for homes priced in the top one-third of all homes listed for sale, those with a price cut increased 0.9% to 16.2% annually in June.
But over that same time, the share homes with a price cut in the bottom one-third of all those listed for sale actually fell 0.1 percentage points annually to 11.2% in June.
The chart below shows in what price markets the cuts are most common and what share in each market saw a price cut in June.
Markets with the largest gap between the top tier of homes and the bottom tier of homes with a price cut include Dallas with 21.9% versus 8.7% – a 13.2 percentage point difference, Orlando with 12.5 percentage points and Houston with 12.2 percentage points.
“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early signs that the winds may be starting to shift ever-so-slightly,” Zillow said in its report. “It’s far too soon to call this a buyer’s market, but these data indicate the frenetic pace of the housing market over the past few years may be starting to return toward a more normal trend.”
What’s more, it seems housing inventory is finally starting to bring some relief to homebuyers at the lower end of the market, providing more affordable housing inventory for first-time buyers.
“Home buyers looking for more housing supply to choose from can take heart, as Thursday’s Census Bureau report on housing construction showed builders are starting work on additional housing, inching closer to balancing inventory with demand,” First American Chief Economist Mark Fleming said in response to the housing starts report.