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Prospective homebuyers have a better shot at beating out the competition and securing a dream home as sellers continue to lower listing prices, according to a new analysis by Zillow.
Despite persistently high mortgage rates, buyers are capitalizing on these price reductions to negotiate better deals. Zillow’s market heat index indicates that buyers had more negotiation power in January than at any point in the past five years.
Skylar Olsen
“Homeowners are finally coming back to the market as the effects of rate lock ease over time, but buyers are still struggling with high monthly costs,” Zillow Chief Economist Skylar Olsen said.
“Sellers are in a good position and are willing to make price cuts to close a deal. Home equity is near record highs, and the general economy and financial markets are surprisingly strong. Homes are selling faster than they did before the pandemic.”
Mortgage rates climbed to 7.04 percent in January — the highest level since May 2024. In January 2024, rates hovered in the mid-6 percent range. These elevated rates have made homeownership increasingly difficult, pushing newly pending sales down 3.6 percent year over year.
While high mortgage rates are a challenge for buyers, sellers appear less concerned.
New listings from existing owners jumped nearly 12 percent year over year as a result of rising home equity and more motivation from sellers, according to Zillow. Western markets saw the most significant growth in listings, with Portland, Oregon, up 48 percent; Seattle up 40 percent; and Denver up 34 percent.
Buyers are leveraging this influx of listings to strengthen their negotiating positions.
In December, nearly 25 percent of homes sold for more than the asking price. However, in January, almost 23 percent of sellers reduced their listing price — the highest percentage for any January since 2018.
Year over year, price cuts increased most significantly in Denver; Las Vegas; San Diego; and Austin, Texas; while Phoenix (34 percent); Jacksonville, Florida (31 percent); Orlando, Florida, and Dallas (both with 29 percent) saw the most widespread reductions.
Homes that sold typically went under contract within 38 days. In expensive coastal metros, including San Jose, California; Boston; Seattle; and Washington, D.C., homes sold within two weeks or less. In contrast, sales moved more slowly in the South, with New Orleans, Atlanta and several Texas and Florida cities experiencing the most relaxed pace.
