According to new Zillow research, the percentage of U.S. home listings with price cuts is greater now than a year ago in two-thirds of the nation’s largest housing markets.
The share of U.S. listings with a price cut increased the most in markets along with West Coast, with the median amount of the price cut remaining steady across the U.S. for the past several years, at about 3 percent.
In San Diego, 20 percent of all listings had a price cut in June 2018, up from 12 percent a year ago. In Seattle, still one of the nation’s fastest appreciating housing markets despite a recent slowdown, 12 percent of all listings had a price cut in June, the greatest share since October 2014. Portland, Sacramento, Calif. and Riverside, Calif. also experienced an increase in the share of listings with a price cut compared to a year ago.
The share of listings with a price cut is on the rise across the U.S., as well. About 14 percent of all listings had a price cut in June, up from a recent low of 11.7 percent at the end of 2016. Since the beginning of the year, the share of listings with a price cut increased 1.2 percentage points, the greatest January-to-June increase ever reported, and more than double the January-to-June increase last year.
Nationally, price cuts are more common among higher-priced listings. The share of higher-priced listings with a price cut rose 0.9 percentage points since the beginning of the year, to 16.2 percent, while the share of lower-priced listings with a price cut fell 0.1 percentage points, to 11.2 percent. Higher-priced listings have seen a disproportionately large increase in price cuts in 23 of the 35 largest metros since the beginning of the year.
U.S. home values rose 8.3 percent over the past year to a median home value of $217,300. While home value growth isn’t slowing down nationally, it is slowing in some of the nation’s hottest housing markets. In almost half of the 35 largest markets, home value growth is appreciating more slowly now than at the beginning of the year. The median home value in Seattle rose 11.4 percent over the past year, but the annual growth rate was close to 14 percent at the beginning of the year.
“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly,” said Zillow senior economist Aaron Terrazas. “A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years. It’s far too soon to call this a buyer’s market, home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”
There are fewer listings with a price cut in some of the nation’s more affordable housing markets. San Antonio, Phoenix, Philadelphia and Houston reported fewer listings with a price cut in June than a year ago. In San Antonio, where the median home value is $185,000, 17.8 percent of all listings had a price cut in June, down from about 20 percent of listings a year ago.
Zillow forecasts home value growth across the U.S. to slow to a 6.6 percent annual appreciation rate over the next year. Among the 35 largest metros, home value growth in San Jose, Calif., Indianapolis and Charlotte, N.C. are forecasted to slow the most.