US Home Sellers Continue to Slash Asking Prices
According to a report issued Wednesday by the real estate website Trulia.com, US home sellers reduced prices on 26 percent of listed properties last month, up from 25 percent in July. It's the highest percentage of listed homes getting a price reduction since an identical 26 percent of homes last October were reduced.
Declining demand in the wake of the expiration of federal homebuyer tax credits, a glut of supply fueled by waves of foreclosures, and continued near-record high unemployment have created a buyers market.
The average reduction in asking price in August was just over $33,000, or ten percent, unchanged from July. In total, homes listed for sale were slashed by a combined $29 billion, down from $30 billion in July but up from $27.2 billion in June. When the expiration of the homebuyer tax credits was approaching, sellers reduced prices by $22.7 billion in March and $25 billion in April.
The percentage of sellers with homes on the market who cut prices either stayed the same or fell in 24 of the nation's 50 largest cities, an improvement from just 16 cities in July. Analysts say that the Trulia report demonstrates that while the housing recovery will take time, it's evident that the long road to recovery has begun in some areas, though most economists agree that housing will not find any stability until significant job growth occurs.
Housing's recovery is being hindered by a number of factors. The expiration of tax credits for homebuyers has caused demand to dwindle, waves of foreclosures have spiked unsold inventory to unmanageable levels, and unemployment remains near historically high levels. And any homeowners owe more on their loans than their homes are worth, which keeps them from looking to move.
The silver lining is that home affordability is likely as high as we'll ever see, with home prices down nearly 30 percent from the 2007 housing boom and mortgage rates hovering around historical lows. The average rate in August for a 30 year mortgage was 4.43 percent, down from 4.56 in July and 5.2 percent in August 2009.