Price Cuts May Help Buyers Negotiate This Spring
Sellers cut prices as new listings rise 4.2% year over year. Median list price dipped to $412K. Homes stay on market longer but still move faster than pre-pandemic.
AUSTIN, Texas — Sellers are increasingly adjusting to the current market conditions, as the share of homes with price reductions grew to 16.8%, up from 14.6% last February, according to the Realtor.com February Monthly Housing Report. Sellers increased their activity this February, as newly listed homes rose 4.2% above last year's levels, marking the highest February activity since 2021.
"While rates remain elevated, we are beginning to see green shoots in the market as sellers grow tired of waiting for significant changes in interest and mortgage rates," said Danielle Hale, chief economist, Realtor.com. "If these trends continue for the next few months, we could see a market that is entering into more balanced terrain, with rising inventory and a potential future slowdown in price growth. While the market does not look like it did before the pandemic, we are moving away from the ultra-high demand, low inventory period we saw in 2021 and 2022."
In February, the median home listing price dipped below last year's level, to $412,000, and sellers listed their homes at greater rates than last year, with newly listed homes increasing 4.2% year over year. More smaller homes were listed this year, which decreased the median list price relative to last year.
Federal employment uncertainty has not yet reached the housing market
Despite a swell of attention, data from this month's report shows that there is no clear connection yet between the markets experiencing the most significant slowdowns and those with a large government workforce. As of February, these markets have not shown notable trends in inventory growth, increasing time on market, softening prices or price reductions. Given the recency of these workforce changes, this is expected at this point in time, and it does not rule out future effects. The health of a local housing market is often tied to the health of the local labor market. Federal workforce reductions could have ripple effects on housing markets with a high concentration of government employees, and the degree of the impact is likely to depend on the health of the private sector in these markets and its ability to provide new opportunities.
For now, housing conditions in these areas are not notably different from other markets. Prior research from Realtor.com suggests that the typical home seller takes at least two weeks, and often longer, to prepare a home for sale, so any real impact is likely ahead.
In the Washington, D.C., area, price reductions increased by 2.3 percentage points compared to last February, in line with the national trend, placing it 23rd on the list of metros with the largest increases in price reductions — about the middle of the ranking. The median list price per square foot has also declined year over year, with the metro ranking 21st in terms of price declines. Notably, Washington, D.C.'s share of price reductions has risen each week throughout February, suggesting that broader effects could become more apparent as the spring market unfolds. Buyers and sellers in the region may want to monitor trends closely as the market continues to adjust.
Homes stay on the market longer than 2024, but still move faster than pre-pandemic
Homes are staying on the market longer, and February 2025 is the 11th month in a row where homes have spent more time on market compared to the previous year. Homes in February spent on average 66 days on the market, 11 fewer days than the average February between 2017 and 2019. Regionally, the South and Midwest saw the biggest gains in time on market this month, averaging an additional seven and eight days on market, respectively.
