In June, a growing number of homes sold for less than they were originally listed, especially at the higher end, according to new research by Zillow.
Zillow reported that about 14 percent of listings across the U.S. had a price cut in June. That's up from a low of 11.7 percent near the end of 2016. In San Diego, 20 percent of listings had a price cut in June, up from 12 percent a year ago.
The cuts are a sign that after years of juggernaut-level price growth, home value growth could be slowing. The report found that value growth in June slowed in almost half of the 35 largest U.S. metros, most notably in Sacramento and Seattle. Values still rose 8.3 percent over the past year, nationally, but Zillow expects that growth to slow to 6.6 percent by this time next year.
Growth in San Jose, California, Indianapolis, Indiana, and Charlotte, North Carolina are expected to slow the most.
“Since the beginning of the year, the share of listings nationwide with a price cut increased 1.2 percentage points,” Zillow reported, calling the shift “the greatest January-to-June increase ever reported.” It was more than double the January-to-June increase in 2017.
The report added that while home value growth isn’t slowing down nationally, “it is slowing in some of the nation’s hottest housing markets.”
The report revealed that the overall increase in the share of homes with a price cut appears to be driven by trends in the upper reaches of the market. Dallas saw the largest disparities between shares of listings in the top tier versus the bottom tier in June—21.9 percent in the top tier, 8.7 percent in the bottom tier. Orlando and Houston saw differentials above 12 percent.
“Since the beginning of the year, the share of higher-priced listings with a price cut—those priced in the top one-third of all homes listed for sale—rose 0.9 percentage points, to 16.2 percent,” the report stated. “Over the same time, the share of lower-priced listings with a price cut (those priced in the bottom one-third of all homes) fell 0.1 percentage points, to 11.2 percent.”
There are fewer listings with a price cut in some of the nation’s more affordable housing markets. San Antonio, Phoenix, Philadelphia, and Houston reported a smaller percentage of listings with a price cut in June than a year ago, the report indicated.
“The housing market has tilted sharply in favor of sellers over the past two years,” the report concluded. “But there are very early signs that the winds may be starting to shift ever-so-slightly. It’s far too soon to call this a buyer’s market, but these data indicate the frenetic pace of the housing market over the past few years may be starting to return toward a more normal trend.”