More than a third of every home that sold during a recent three-month timeframe involved some type of seller concession. Home sellers nationwide cut prices on one of every five active listings during October. Those were among the findings from an analysis of pricing data by Redfin Corp.
Among concessions Redfin buyers’ agents said were used to reduce the buyers’ total cost of buying a home were money toward repairs, closing costs and/or mortgage-rate buydowns. That analysis of concessions did not consider situations in which the seller lowered their home’s list price or lowered the price during negotiations with a buyer.
Some brokers also reported recent sellers have become more receptive to contingent offers.
Redfin found concessions are most common in Salt Lake City with sellers granting them in 63.3% of home sales in the period the company analyzed. San Diego, Denver, Las Vegas and Raleigh, NC also experienced seller concessions in more than half the sales.
Concessions were least common in Boston, where only 11.1% of sellers provided them. San Jose, New York, Philadelphia, and Chicago were also among metros where fewer than one of every five sellers agreed to concessions.
In Seattle, a reported 35.3% of home sales during the three months ending October 31, 2023, involved some form of concession.
For homebuilders, mortgage-rate buydowns are a popular incentive, but higher rates are causing some projects to stall. The National Association of Home Builders reported a 15% year-over-year decline in the number of single-family homes under construction in September.
Price drops reached record highs during October. Redfin reported 37% of active listings in Seattle and 41.5% of Tacoma listings had price drops during the month.
In two metro areas, more than half the listings had price drops during October: Cincinnati (55.2%) and Indianapolis (51.3%).
Nationally, Redfin found the weekly average for price drops, at nearly 7% for the four weeks ended October 29, set a record.
In Seattle, the developer of a 37-unit condominium project on Alki Beach in West Seattle offered price reductions up to 20% last month in a “meet the market” strategy. The offer, which also included waiving homeowner dues during 2024, was limited to six buyers and subject to certain conditions that must be satisfied by January 31. The price of a penthouse was nearly $4.4 million but cut to $3.6 million, while a one-bedroom plus den was reduced from almost $1.6 million to $1.29 million.
Analysts pointed to interest rates that have been hovering between 7.5% and 8% as a factor in the uptick of price drops and concessions. October’s mortgage rates reached their highest level in 23 years.
Even with more sellers cutting prices, median sales prices are still about 3% higher than a year ago, according to Redfin’s findings. “Buyers simply don’t have the budget they once did,” the report noted.