Sellers Are Slashing Home Prices by 25% or More in These Popular Cities

The U.S. housing market continues to respond to the Federal Reserve’s September interest rate cut, which brought mortgage interest rates down to 6.2% in mid-September—the lowest since September 2023.

While mortgage rates have edged up since then, the ripple effect of falling rates is clear: As more homes hit the market, sellers are being forced to make price reductions to compete.

The median home price dropped nearly $5,000 between August and September, from $429,990 to $425,000. Even better news for buyers? Price reductions increased by 0.9 percentage points this September compared with the same time last year, according to the Realtor.com® September Housing Market Trends Report.

“The percentage of homes with price reductions increased from 17.7% in September of last year to 18.6% this year,” says Realtor.com senior economist Ralph McLaughlin in his recent analysis. “What’s more, the overall share of inventory with price cuts is 1.0 percentage points higher than the shares seen between September 2017 to September 2019.”

More housing stock equals less competition

What’s driving the price cuts in addition to more moderate mortgage rates? It’s a classic case of supply and demand. Lower interest rates have drawn both buyers and sellers into the market, and sellers who have already listed their homes are now forced to offer more competitive prices to compete with new inventory.

The U.S. housing market saw a 34% year-over-year growth in the number of homes for sale in September, while the total number of unsold homes jumped by 22.9% from the previous year.

Moreover, new listings also rose by 11.9% year over year, flooding the market with more options for buyers and making it harder for sellers to stand out without cutting prices.

“Home price reductions signal to homebuyers that homes are not moving as quickly as sellers anticipated, and thus they reduce prices in order to drum up more interest from buyers,” says McLaughlin.

Where to find price-reduced homes

Home shoppers across most of the nation should have plenty of price-reduced homes to choose from.

The share of price reductions was up overall compared with a year ago in the Northeast (+1.4 percentage points), the West (+1.3 percentage points), and the Midwest (+1.1 percentage points). The only region that saw a downturn in price reductions was the South (-0.1 percentage points).

As for the 50 largest metros, 40 saw the share of price reductions increase compared with last September.

The cities with the biggest jump in shares are Providence, RI (+8.9 percentage points), Portland, OR (+5.6 percentage points), and Tampa, FL (+5.5 percentage points).

The price reduction advantage

Beyond potentially saving a bundle on the price tag, a price-reduced home could save money in other aspects of the homebuying process.

“While [price reduction] indicates that sellers are certainly flexible on price, it also means they could be flexible on other aspects of a home sale, such as offering up concessions like closing costs, point buy-down, seller credits for repairs and upgrades, and rent-backs if buyers aren’t quite ready to move in,” says McLaughlin. “However, this doesn’t mean buyers can get whatever they ask for and should be aware there is a fine line between respectable offers and insulting offers, the latter of which may cause a seller to not want to do business with a particular buyer.”

When in doubt, talk to your agent about what type of negotiations the seller might be open to.

Where can you find the most price-reduced homes? Read on to find out.