January’s new listings jumped 11.5% year over year
January saw a significant shift in the housing market, with nearly a quarter of all home listings seeing price cuts, marking the largest portion for any January since 2018. According to ReadySetLoan, this surge in price cuts signals that sellers are becoming more motivated to sell, and the long-standing "lock-in" effect, caused by high mortgage rates, is beginning to ease.
A Record Number of Listings with Price Cuts
Around 23% of home listings had their prices reduced in January, a sharp indicator that sellers are adjusting to the changing market dynamics. Price cuts were most pronounced in cities like Phoenix, where 33.5% of listings saw reductions, followed by Tampa (32%), Jacksonville (31%), and Orlando (29%). Dallas also saw 29% of its listings with price cuts, highlighting how widespread the trend has become across different regions.
In fact, ReadySetLoan explains that this price cut surge reflects sellers becoming more flexible, driven by both financial and market factors. With high mortgage rates keeping many buyers on the sidelines, sellers are beginning to realize that they may need to lower prices to attract serious buyers.
Why Are Sellers Cutting Prices?
Zillow's Chief Economist, Skylar Olsen, explained in the January market report that sellers are shedding the effects of the "lock-in" caused by low mortgage rates. Many homeowners are no longer as constrained by their current low-rate mortgages, which previously made it difficult to sell. As a result, there’s been a marked rise in new listings, with an 11.5% increase year over year in January, according to Zillow data.
Home equity is near record highs, and the overall economic outlook remains surprisingly strong, which is making homeowners more willing to list their properties, even at reduced prices. However, with mortgage rates hovering around 7%, affordability remains a significant hurdle for many buyers.
How the Market Is Shifting for Buyers
While the number of price cuts is increasing, buyers should still proceed cautiously. The higher mortgage rates are impacting affordability, causing pending sales to drop 3.6% year over year in January. Homes that are selling now are typically under contract in about 38 days, which is nine days slower than last year but still nearly 10 days faster than pre-pandemic norms.
The competition in the market, however, varies widely by region. In expensive coastal areas like San Jose, Boston, Seattle, and Washington, D.C., homes are selling in two weeks or less. On the other hand, the South has seen slower sales, with homes taking longer to go under contract.
What This Means for You
If you’re thinking about buying or selling a home, understanding the local market conditions is crucial. Sellers are increasingly willing to adjust their prices, but buyers still face challenges with higher mortgage rates. Whether you're a buyer looking for the best deal or a seller trying to navigate the competitive market, ReadySetLoan is here to help you explore mortgage options and stay up-to-date on the latest market trends.
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