Home Price Cuts as Housing Inventory Rises in 2024

Home price cuts have become a significant trend in 2024, reflecting the dynamic shifts in the housing market. As mortgage rates remain high and inventory continues to grow, sellers are finding it increasingly necessary to reduce their asking prices to attract buyers.

Rising Inventory and Its Impact on Home Price Cuts

The available inventory of unsold single-family homes in the U.S. has risen significantly, with a 40% increase from last year. This surge in inventory means more options for buyers, but it also means more competition among sellers, leading to more frequent price cuts.

increasing home inventory New Home Sales in March 2024 not enough homes in the US May 2024 mortgage rates strongest seller markets in the US Spike in Average US Square Foot Costs Since 2019 — Canva image

Mortgage Rates and Buyer Sensitivity

Mortgage rates have been a crucial factor in the current market dynamics. With rates remaining high, potential buyers are more sensitive to price changes. This sensitivity has forced many sellers to cut prices to make their properties more appealing.

Pending Home Sales Increasing

Despite the challenges, there were 68,000 new contracts for single-family home sales this week, a slight increase from last week but 8% fewer than the same week last year. This trend of fewer sales has been consistent since early May, influenced by high mortgage rates. Currently, 381,000 single-family homes are under contract across the country.

Home Prices Going Down

The median price of single-family homes in the U.S. is just under $455,000, slightly decreasing each week in the second half of the year. Newly listed homes are priced at $425,000, indicating a 5% increase over the same week last year. However, for homes getting offers, the average price is $395,000, up 4% from last year.

Price Reductions are Up

The percentage of listings that have reduced their asking prices is now up to 38% of the market, a sign of weakening demand. This trend is particularly notable in markets like Boston and Southern California, which had resilient years but are now experiencing more price cuts as inventory builds.

- Top 10 Cities with the Worst Housing Shortage — Boston, Massachusetts

Regional Variations

While the trend of home price cuts is national, there are regional variations. For instance, markets that were tight during the pandemic, such as Massachusetts and New York, are now seeing significant inventory growth, leading to more price reductions.

new york's affordable housing — New York

Future Outlook

Looking ahead, it is expected that home price cuts will continue as inventory remains high and mortgage rates potentially fluctuate. However, the phenomenon of “downside stickiness” in home prices suggests that while prices may flatten, significant drops are unlikely.

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Home price cuts in 2024 are a response to rising inventory and high mortgage rates. Sellers are adjusting their strategies to meet the demands of a changing market, resulting in a more competitive environment.