This city saw 1 in 3 home sellers slash their asking price in September to attract reluctant buyers

By Aarthi Swaminathan

As hesitant buyers drive home prices down, these are the places with the most price cuts and the biggest markdowns

Sellers are encountering an unfriendly housing market, and many are cutting their asking prices to lure buyers.

Todd Luong has resorted to paying his real-estate agents to hold open houses, because no one wants to staff one. They were getting discouraged when no potential buyers showed up.

Years ago, Luong, an agent at Re/Max DFW Associates in the Dallas-Forth Worth area, would have rarely been short of takers. Holding an open house was a way for younger agents to meet people and build their client list.

In today's housing market, traffic is so slow that he's had to sweeten the deal by offering a hundred bucks to agents to hold an open house, he told MarketWatch. He's also brought cookies and bottles of water to houses to liven things up.

"It's like you have this party, and nobody shows up," said Luong, adding that it's not surprising that things are slow, given the surge in mortgage rates this year.

The housing market has been in a deep downturn over the last few years, but with mortgage rates climbing to a three-year high, home prices in many areas are finally falling as more sellers slash their prices to lure buyers.

Home sellers are cutting prices to attract buyers

For years, home prices have marched upward, hitting new record highs as people hung on to their homes and their ultralow mortgage rates, restricting supply.

That so-called lock-in effect is finally easing as more people put their houses on the market. But as inventory levels rise, sellers now face a harsh reality.

Years of tight inventory have put buyers on guard. They're taking their time and negotiating lower prices, real-estate agents say. "Today's buyers have enough options that they can afford to be picky, so it's critical for sellers to price correctly and attract buyers from the get-go," Chandra Gordon, a Seattle-based Redfin agent, said in a recent report.

Hesitant buyers are now driving prices down in many markets. "I had one buyer that waited 30 days before they made an offer," Luong said.

Another buyer saw a home listed for $450,000 and offered $415,000 to the seller. They later closed on the home for $420,000.

"The sense of urgency is just not there. They probably think there are going to be more homes that come up," Luong added.

The places with the highest share of price cuts - and the biggest markdowns

Among the 50 most populous U.S. metropolitan areas, these are the five with the highest share of homes with a price cut, according to an exclusive analysis of home listings as of Sept. 30 by Realtor.com for MarketWatch:

 
Metro area            Share of home listings with a price cut 
Salt Lake City, Utah  33.6% 
Denver, Colo.         32.1% 
Portland, Ore.        31.6% 
Indianapolis, Ind.    30.5% 
Phoenix, Ariz.        29.0% 

Notably, even though one in three listings in Salt Lake City had a price cut in September, the cuts weren't as deep as in other places, Jake Krimmel, a senior economist at Realtor.com, said in a report. Listings there had a median cut of 4.2% off their initial asking price, compared with the group average of 5%.

The dollar amount of the price cuts was largest in the most expensive housing markets. For instance, the median price cut for a home listed in San Jose, Calif., in September was nearly $77,000. The median list price in San Jose was about $1.2 million that month. San Francisco and Los Angeles saw the second- and third-largest price cuts.

In Pittsburgh, the median price cut on a home was about $15,100 - relatively high given that the median list price there was about $265,000.

That discount put Steel City in the top spot among metropolitan areas with the biggest markdowns as of Sept. 30, according to Realtor.com's analysis:

 
Metro area       Median size of price cut relative to initial asking price 
Pittsburgh, Pa.  6.71% 
Buffalo, N.Y.    6.26% 
Austin, Texas    6.19% 
Cleveland, Ohio  6.06% 
St. Louis, Mo.   6% 

Demand hasn't disappeared. People want to buy homes, but many can't afford to. This spring, more people were saving and sharing for-sale listings on Zillow (ZG), the real-estate platform said, with engagement levels jumping 21% from a year ago, suggesting that potential buyers are still looking at properties online, even if they're not putting in offers.

The challenge for buyers is that up until now, home prices haven't fallen meaningfully in many parts of the country.

Now there are some signs of a shift.

Industry data varies on how prevalent the price cutting is, but everything points to an increase. About one in five for-sale listings had a price cut in September, the highest share in nearly four years, Realtor.com and Redfin found. The median list price nationally was about $420,000, down 1.4% from a year ago.

Parcl HQ, a real-estate platform, estimated the share of listings with a price cut to be double what it was last year, at around 42.6%.

"This is the time of year when leverage usually shifts more toward buyers, but unexpectedly higher mortgage rates means even fewer buyers are showing up than normal this fall," Krimmel said.

'It is worth watching how deep the discounts get'

The median discount across all listings, according to Parcl HQ data, was about 5.1%.

"It is worth watching how deep the discounts get," Krimmel said, along with "whether some sellers resort to multiple cuts in quick succession, and if that actually results in more signed contracts or just leaves homes sitting longer."

In Dallas, where half of home listings had a price cut as of Oct. 1, according to Parcl HQ data, Luong is advising sellers to list below what other comparable homes on the market are going for, especially heading into the holiday season, when sales usually slow further.

Whether home prices will fall substantially - or even crash - is unclear. Even though "housing demand is being hammered, housing supply is also weak," said Mark Zandi, chief economist at Moody's Analytics. Inventory levels are still lower than where they were during the pandemic "as homeowners remain locked in given their low existing mortgage rate."

With the average 30-year mortgage rate now above 7%, the housing market will likely remain in a "deep freeze," Zandi told MarketWatch - and "there is no getting out until mortgage rates have a 6% handle."

The winners and losers of high mortgage rates and price cuts

Ultimately, "the housing market doesn't need cheaper money. It needs cheaper houses," Michael Carbonare, a real-estate investor, wrote in a LinkedIn post. Even though mortgage rates were similarly high in the past, home prices were still affordable relative to buyers' incomes.

Lower list prices would be a better solution to the housing market's stagnation, he wrote, than lower mortgage rates.

But "that's a conversation nobody wants to have because falling prices are great for buyers and absolutely terrifying for people who bought at the top," he said.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

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-Aarthi Swaminathan

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10-02-26 1626ET

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