Price cuts in the U.S. housing market have surged to the highest level in five years, with 22.1% of listings in May 2024 receiving a price reduction. This figure is nearly three times higher than the pandemic low and is rising rapidly, signaling a weakening market where prices are likely to drop further in the second half of 2024.
Price cuts serve as one of the most immediate indicators of a softening market. As more sellers reduce their asking prices, it signals a growing sense of desperation. By fall, the rate of price reductions could hit 30%.
The disparities across states are stark. The most significant reductions are occurring in:
- Colorado – 28.6%
- Florida – 28.5%
- Tennessee – 28.4%
- Arizona – 28.3%
- Texas – 27.5%
Not surprisingly, these are the states where inventory has also risen the most. Housing markets in cities like Phoenix, Tampa, Dallas, Austin, and Denver are experiencing skyrocketing inventory and widespread price cuts, the telltale signs of an impending market correction.
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2) 2) Of course, there are big differences in where sellers are cutting the price. With the most reductions occurring in states like:
1. Colorado – 28.6%
2. Florida – 28.5%
3. Tennessee – 28.4%
4. Arizona – 28.3%
5. Texas – 27.5%Not so coincidentally – these are also… pic.twitter.com/eD0TYAhXTr
— Nick Gerli (@nickgerli1) June 6, 2024
4) In Tampa – you can see that this the highest price cut rate since 2018. And the 2nd highest in recent history.
Indicating that something "different" is occurring in this market in terms of seller desperation to reduce prices.
Don't be surprised if values in Tampa drop in… pic.twitter.com/kR8oXr428g
— Nick Gerli (@nickgerli1) June 6, 2024
Housing Markets most in cross-hairs of price declines in 2024:
-Phoenix
-Tampa
-Dallas
-Austin
-DenverEach of these metros is experiencing skyrocketing inventory and price cuts. The telltale sign of an incoming correction.
Access Home Price Forecasts for every city in America…
— Nick Gerli (@nickgerli1) June 7, 2024