House price cuts were at their highest level in March since 2019, Realtor.com revealed on Thursday, suggesting sellers are now more willing to offer potential buyers a bargain.
The housing market is entering its busy Spring season, and buyers are coming out of their winter hibernation to house hunt in earnest. And they won't be disappointed. The percentage of homes with price cuts reached 15 percent in March, 2024 compared to about 13 percent a year ago.
But buyers are confronting a market that is experiencing elevated mortgage rates and high prices. The national median price of a home jumped last month to about $425,000 from $415,500 in February, according to Realtor.com, even though 23.5 percent more properties are now for sale than in March 2023.
"A growing share of price reductions shows that even though buyers may feel that sellers hold all of the cards in today's housing market, more sellers are willing to adjust their expectations more often than is typical for this time of year," Danielle Hale, Realtor.com's chief economist, noted on the company's website.
Some sellers are willing to brave the elevated mortgage rates to replace their current homes.
Read more: How To Sell Your Home
"Family and job situations change, and a growing number of homeowners are choosing not to delay a move any longer. This is a healthy update for the housing market," Hale said.
High mortgage rates, which now hover at around 7 percent, have proven to be an obstacle that buyers are struggling to overcome. As of March 29, applications for home loans declined for another week with lenders saying that expensive rates were a key factor in the lukewarm data.
Realtor.com points out the impact of high mortgage rates on buyers, where the cost of monthly payments has gone up by nearly 3 percent when financing for 80 percent of a home loan. This means to acquire a median-priced property, a prospective homeowner needs to earn nearly $89,000 a year, an increase of $2,500. That income does not account for taxes and homeowner insurance costs, which have also been rising.
Read more: First-Time Homebuyer Guide
"However, as growth in the median list price has declined and mortgage rate growth has slowed, the increase in the monthly cost to purchase a home has also declined," according to Realtor.com. "While the cost to purchase a home is still growing, at least the rate of growth has slowed, giving consumers a chance to catch up."
Hale suggested one thing buyers can expect is that prices may not accelerate as much in 2024 as the supply of properties for sale increases compared to previous years.
"Home prices this year are expected to move largely sideways," she said. "We'll see the usual climb from spring into summer, but I don't think we'll see a big jump over prices one year ago since many homebuyers are already at the edge of their budgets, and newly constructed homes and steady rents provide cost-effective alternatives that alleviate some of the price pressure we've seen on existing homes in recent years."
Realtor.com suggested that new listings priced at the more attractive range of $200,000 to $350,000 were up by 30.5 percent compared to the same time a year ago.
"The fact that we're seeing more options among lower-price categories is a welcome sign for entry-level homebuyers and downsizers alike," Hale said.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
