Slower U.S. Housing Market Leads to Discounts and Extended Sale Times

Homebuyers faced a less competitive slower U.S. housing market as activity slowed, according to a Redfin report released on Wednesday. Properties stayed on the market longer, with the largest price reductions in two years. Most metropolitan areas saw homes selling below asking price, with the steepest discounts in Florida.

Homes Stay on the Market Longer

Listings lingered for an average of 56 days before going under contract, marking the longest period in the past five years. This extended timeline suggests a shift in the market dynamics, with buyers having more negotiating power.

Price Cuts: The Advantage for Buyers

The report highlighted that buyers can now negotiate better terms, with many homes selling for 2% less than the asking price in January, the steepest markdown since early 2023. Sellers who had previously struggled to close deals are now more willing to reduce prices.

High Mortgage Rates and Inflated Prices Impact Market

Persistently high mortgage rates, compared to pandemic-era lows, combined with inflated home prices, have dampened the U.S. housing market. This slowdown led to the lowest transaction volume since the 1990s, further indicating a shift in the housing landscape.

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Buyer Delays Amid Uncertainty

Buyers are also delaying their decisions, influenced by political and economic uncertainties, according to the report. Despite the slower market, certain areas still experience demand, particularly for move-in-ready homes near top-rated schools.

Florida Faces Steepest Price Reductions

Florida buyers saw some of the largest price reductions, with homes on the southeast coast selling for about 5% below asking price. The region’s challenges, including hurricanes and soaring insurance costs, have caused hesitation among potential buyers.

Regional Variations in Price Trends

Despite a general slowdown, seven of the 50 largest U.S. metro areas saw average sales prices exceed asking prices. The Bay Area in California, as well as Nassau County, New York, and Newark, New Jersey, experienced homes selling above list price in January.

Market Trends: Faster Closings in Northern California

Properties in Florida stayed on the market the longest, while Northern California saw the fastest closings. This regional variation underscores the differing dynamics within the U.S. housing market as buyers adjust to a new environment.