The U.S. housing market has been reacting strongly to the Federal Reserve’s interest rate cut in September. This move brought mortgage rates down to 6.2%, the lowest level since September 2023, which created a noticeable shift in the market.
While mortgage rates have ticked up slightly since, the drop had a significant impact. As more homes enter the market, sellers are being forced to make price reductions to stay competitive.
According to Realtor.com’s September Housing Market Trends Report, the median home price fell from $429,990 in August to $425,000 in September—a decline of nearly $5,000. Even more encouraging for buyers is that price reductions are on the rise, increasing by 0.9 percentage points compared to the same period last year.
Ralph McLaughlin, a senior economist at Realtor.com, noted, “The percentage of homes with price reductions increased from 17.7% in September last year to 18.6% this year. Additionally, the overall share of inventory with price cuts is now 1.0 percentage points higher than it was during the period between September 2017 and September 2019.”
More Homes, Less Competition
The driving force behind these price cuts is a classic case of supply and demand. With mortgage rates becoming more manageable, both buyers and sellers have been drawn to the market. This influx has led to heightened competition, as sellers are now forced to offer more competitive prices to keep up with the growing number of listings.
In September, the U.S. housing market experienced a 34% year-over-year increase in the number of homes for sale, while unsold homes rose by 22.9% compared to last year. Additionally, new listings saw an 11.9% year-over-year jump, making it harder for sellers to attract buyers without slashing prices.
McLaughlin emphasizes, “When homes are not moving as quickly as sellers expected, they often resort to reducing prices to stimulate buyer interest.”
Where to Find Price-Reduced Homes
Across much of the U.S., home shoppers are seeing plenty of homes with reduced prices. The share of price cuts increased across the Northeast (+1.4 percentage points), the West (+1.3 percentage points), and the Midwest (+1.1 percentage points). The South was the only region that saw a slight downturn (-0.1 percentage points).
Of the 50 largest metro areas, 40 saw increases in the share of price reductions compared to last September. Leading the way are cities like Providence, RI (+8.9 percentage points), Portland, OR (+5.6 percentage points), and Tampa, FL (+5.5 percentage points).
Benefits of Price-Reduced Homes
Beyond saving money on the purchase price, price-reduced homes can offer other financial advantages. According to McLaughlin, “When sellers reduce the price, they may also be more willing to negotiate on other aspects of the sale—such as offering concessions like closing costs, seller credits for repairs, or even a rent-back option if buyers aren’t ready to move in right away.”
That said, buyers should be mindful not to make insulting offers that could alienate the seller. Always consult your real estate agent for advice on how to approach negotiations.
Cities Where Sellers Are Slashing Prices
Here’s a look at 10 cities where home prices are seeing significant reductions:
Phoenix, AZ
- Median list price: $532,000
- Percentage of listings with price reductions: 25%
- YoY increase in price reductions: 1.4 percentage points
This four-bedroom home in Phoenix was reduced by $12,000 and is now listed at $382,000.
Austin, TX
- Median list price: $556,000
- Percentage of listings with price reductions: 25%
- YoY increase in price reductions: 8.8 percentage points
This three-bedroom home in Austin saw a price cut of $25,000, now listed at $575,000.
Denver, CO
- Median list price: $649,000
- Percentage of listings with price reductions: 25.2%
- YoY increase in price reductions: 1.6 percentage points
A four-bedroom home in Denver was reduced by $10,000 and is now priced at $499,999.
Virginia Beach, VA
- Median list price: $649,000
- Percentage of listings with price reductions: 25.9%
- YoY increase in price reductions: 4.7 percentage points
A five-bedroom home in Virginia Beach is now listed at $622,500 after a $2,000 reduction.
Washington, DC
- Median list price: $599,948
- Percentage of listings with price reductions: 25.9%
- YoY increase in price reductions: -0.2 percentage points
A two-bedroom condo in Washington, DC, was reduced by $12,000 and is now available for $198,500.
Miami, FL
- Median list price: $525,000
- Percentage of listings with price reductions: 26.2%
- YoY increase in price reductions: 3.5 percentage points
A four-bedroom home in Miami saw a $16,000 price cut, now priced at $829,000.
Minneapolis, MN
- Median list price: $432,500
- Percentage of listings with price reductions: 26.4%
- YoY increase in price reductions: 0.4 percentage points
This four-bedroom home in Minneapolis had a $5,000 price reduction, now listed at $420,000.
San Francisco, CA
- Median list price: $997,500
- Percentage of listings with price reductions: 27.4%
- YoY increase in price reductions: 1.2 percentage points
A one-bedroom condo in San Francisco was reduced by $25,000 and is now listed at $775,000.
Riverside, CA
- Median list price: $599,000
- Percentage of listings with price reductions: 28.1%
- YoY increase in price reductions: 0.6 percentage points
This four-bedroom home in Riverside saw a $24,000 price reduction, now priced at $935,000.
San Jose, CA
- Median list price: $1,432,170
- Percentage of listings with price reductions: 28.2%
- YoY increase in price reductions: 0.4 percentage points
A four-bedroom home in San Jose had a $50,000 price cut and is now listed at $1.2 million.
This post was originally published on Realtor.com.