America’s once-frenzied housing market is cooling, with over 56% of listings closing below the initial asking price. Amid rising inventory and weakened demand, sellers are increasingly forced to make concessions to attract hesitant buyers.
The U.S. property market, long defined by rapid sales and escalating prices, is entering a new phase. Elevated mortgage rates and affordability issues are shifting the balance of power, offering buyers greater negotiating leverage.
Rising Inventory Puts Pressure On Sellers
The U.S. housing market is seeing a steady increase in available homes, reversing the supply constraints that fuelled the post-pandemic price surge. According to data platform Cotality, 56% of homes sold in May closed below their listed price—a significant jump compared to recent years. This is indicative of a market where buyers, constrained by high borrowing costs, are increasingly unwilling or unable to meet sellers’ price expectations.
In response, many sellers are opting to reduce prices to generate interest. Selma Hepp, chief economist at Cotality, explained that these reductions are driven by “a combination of continuing affordability challenges, rising inventory, and weakened buyer demand”. According to Redfin, the number of sellers now exceeds buyers by over 500,000 nationally.
Florida has emerged as a leading example of this shift. Inventory in the state rose 7.5% year-on-year in July, while the median sale price declined by 1.3%. Almost a third of homes listed in Florida saw price drops. Texas, another state that expanded housing supply rapidly during the pandemic, is experiencing a similar pattern.
The cooling effect is not confined to the Sun Belt. Hepp noted that “the share of homes with price reductions reached multiyear highs this spring—the highest June proportion since at least 2018”. In high-supply markets, sellers are facing the most intense competition in years.
Buyer Power Grows, But Affordability Remains A Barrier
While the current climate appears favourable to prospective homeowners, affordability remains a significant obstacle. Mortgage rates have hovered around 6.8%, constraining purchasing power. According to Cotality, the average buyer now needs approximately $200,000 more than a decade ago to afford a median-priced home.
This paradox—greater choice amid reduced purchasing capacity—has led to what Hepp described as a “frozen market”. Buyers may have more time and options, but are often unable to act due to broader economic pressures, including high property taxes and rising insurance premiums.
Incentives are emerging as a tool to bridge this gap. Developers are increasingly offering rate buydowns and assistance with closing costs to avoid visible price cuts. Traditional sellers are beginning to follow suit, enhancing listings with offers such as inspection coverage or home upgrades. Still, a significant portion of homeowners remain hesitant to sell, especially those holding low-rate mortgages. Redfin reports a 48% year-on-year rise in delisted properties in July, as many wait for more favourable market conditions.
