The housing market in the United States continues to soar, leading to a growing number of buyers opting out of purchasing homes. Last year, the sales of existing homes in the United States plummeted to the lowest level since 1995, with housing sales hitting a 30-year low. At present, the American housing market is gradually shifting towards a buyer’s market, allowing some buyers to enjoy the largest discounts unseen in years.
According to a report by The Wall Street Journal on February 2nd, the latest data from real estate brokerage firm Redfin shows that nearly 62% of buyers last year ended up purchasing homes below the listing price set by sellers, the highest since 2019. The average discount reached nearly 8%, the highest since 2012. Moreover, buyers are also able to negotiate for various incentives such as cashback from sellers.
All of these indicate a significant tilt in the housing market towards buyers. During the period of the pandemic from 2020 to 2022, ultra-low mortgage rates attracted a large number of buyers, creating a strong seller’s market where buyers frequently engaged in bidding wars due to high competition. The market dynamics have now reversed. Redfin data shows that in December last year, there were over six hundred thousand more sellers than buyers in the United States, the largest gap since 2013.
Under the dual pressures of high housing prices and high mortgage rates, many potential buyers are hesitating to make home purchases, resulting in subdued demand. For those who still have the financial means to buy homes, there are now more options available in the market, giving them greater bargaining power.
Daryl Fairweather, the Chief Economist at Redfin, stated that when there is a gap between sellers’ expectations and buyers’ affordability, ultimately it is the buyers who can push prices down, determining the price rather than the sellers. Fairweather believes that home sales volume is estimated to slightly increase this year, with both buyers and sellers reaching consensus on reasonable prices.
Indeed, in recent months, there has been a slight rebound in market momentum. Currently, mortgage rates are lower than a year ago, reducing the cost of home buying. In December last year, existing home sales increased by 5.1%, marking the largest growth in nearly two years, while the pace of home price increases has slightly eased. The southern markets of the United States, especially in Florida and Texas, are particularly favorable to buyers. In recent years, new home construction has been booming in these two states, resulting in abundant inventory.
Redfin data shows that in major metropolitan areas of Florida such as West Palm Beach, Fort Lauderdale, and Miami, at least 85% of buyers last year ended up purchasing homes below the listing price. In contrast, due to limited new construction, in Newark, New Jersey, this percentage was only 32%, while in San Francisco and San Jose in California, it was only 39%.
With the high cost of buying homes, buyers are more selective than ever before. Real estate agents point out that even in cities where inventory levels are below normal, homes that are overpriced may remain on the market for a long time. Some real estate agents caution that buyers should not expect a repeat of 2021, where high listing prices could attract a flood of buyers.
Real estate agents also warn that houses in poor condition requiring renovation and upgrades are not easy to sell as buyers are reluctant to spend money and effort on renovations. Some buyers have been backing out of deals after home inspections, leading to an increase in canceled home sales contracts. Agents note that sellers are more willing to negotiate now compared to the past few years.
A married couple looking for homes in the Austin, Texas area since 2024 found prices to be excessively high back then. The couple expressed that the current market is the most buyer-friendly they have seen so far. In January of this year, the couple successfully negotiated a 4% discount and purchased a three-bedroom residence.