Realtor.com® announced today, the findings of its August housing trend report which revealed a surge in price cuts and the second largest drop in the U.S. median listing price in three years. The report also showed a decrease in price growth and inventory declines, although competition between buyers remained strong.
“Buyers, exhausted by bidding wars and little choice in inventory, could finally catch a break,” said Danielle Hale, chief economist for realtor.com®. “An increase in price cuts suggests that sellers are starting to become more flexible, especially in pricey markets. However, affordability is a concern in most areas which continue to be sellers’ markets. Fierce competition and low inventory continue to push up prices. While buyers are gaining leverage in some markets, we are still far from a true buyer’s market.” Hale’s take on the market keeps from getting too excited, and sellers from canceling their listings.
The average listing price in the U.S. decreased by $4,000 in August, dropping to $295,000 from an astounding record-high of $299,000 in July. This is the second largest monthly listing price drop since August 2015. While prices are still 7 percent higher than they were one year ago, the year-over-year increase is smaller than the 10 percent year-over-year gain seen last August.
The decreasing price growth was also observed in the larger markets. The average yearly growth in median listing prices in the largest 45 markets combined was 6 percent, down from 8 percent this time last year.
Meanwhile, price cuts are on the rise, especially in expensive markets where inventory is rising. 19.1 percent of listings now face price cuts; up 1.5 percentage points from last year. The share of price cuts among listings is now 1.5 times more prevalent than in August 2012 when 13 percent of listings featured price discounts. This upward movement was more pronounced in big cities in the last year including Seattle with an 8 percent increase in cuts; San Jose with a 7 percent increase; and a 5 percent increase in San Diego, Riverside, Indianapolis and Los Angeles. 39 of the 45 largest markets saw an increase in the share of price cuts over last year.
As predicted in the realtor.com® 2018 housing forecast, inventory declines slowed with only 2 percent fewer homes on sale from this year to last year. Inventory increased 2 percent in July, in line with the typical seasonal increase. The trend continues to gain strength as the last week of August saw the first year-over-year increase in inventory in four years. Approximately 488,000 new listings entered the market during August. San Jose, Seattle, and San Diego were the three markets with the most significant inventory jump over last year, all posting increases of 28 percent or more.
Kurt Galitski
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