The once sizzling summer housing market has cooled significantly, offering homebuyers a rare opportunity to gain the upper hand. As sellers grapple with high mortgage rates and slowing demand, price cuts have reached their highest level in five years. Could this be the perfect time for buyers to make their move?

More Homes, More Price Cuts: A Buyer’s Market Emerges

In August, the number of homes actively for sale soared 36.2% compared to the previous year, marking the highest level of listings since May 2020. With more options available, buyers are seeing price reductions like never before. According to Realtor.com, 19.3% of listings experienced price cuts—the most for any August since 2018. This suggests a notable shift in market power, with buyers gaining the upper hand as sellers become more patient and modest in their pricing.

High Mortgage Rates Slow the Market

One of the main factors contributing to this shift is the continued rise of mortgage rates. August saw a dip in mortgage rates to 6.35%, their lowest point in 18 months, but it wasn’t enough to stir up significant demand. Many potential buyers are holding out for even lower rates, especially with expectations that the Federal Reserve will cut rates three times before the end of the year.

This cautious wait-and-see approach from buyers has put additional pressure on sellers, leading to more price cuts and longer listing times.

Home Prices Are Falling—But Not Everywhere

National median home prices dropped in August from $439,950 in July to $429,995, largely due to increased price reductions. “More sellers are coming to the table, but with fewer buyers, they’ve had to recalibrate their prices,” explains Danielle Hale, Realtor.com Chief Economist.

However, not all price points are declining. Smaller homes in the $200,000 to $350,000 range saw the most growth, with listings in this category jumping by 45.1% year over year, especially in the South. The median price per square foot for homes rose by 2.3% in August, driven by the higher demand for smaller, more affordable homes.

Housing Stock Is on the Rise Nationwide

August also saw an increase in the number of homes for sale across all regions of the U.S., giving buyers more opportunities to find the perfect home. The South led the way with a 46.0% increase in active listings, followed by the West (35.7%), Midwest (23.8%), and Northeast (15.1%).

The metros seeing the largest spikes in available homes included Tampa, FL (91.1%), San Diego, CA (80.1%), and Orlando, FL (75.7%). This boost in inventory means that buyers have more homes to tour and negotiate over.

New Listings Decline, but a Turnaround May Be Coming

While overall listings rose, newly listed homes dipped slightly by 0.8% from the previous year, ending a nine-month streak of growing new listings. Volatile mortgage rates have caused many potential sellers to hit pause, waiting for rates to stabilize before putting their homes on the market.

Regions like the South and West saw slight increases in new listings, but the Midwest and Northeast experienced drops of 5.4% and 1.0%, respectively. Some metros, such as Cincinnati, OH (31.1%), and Seattle, WA (29.2%), did see a notable rise in new listings, hinting at a potential rebound in the coming months.

Realtor.com’s McLaughlin believes lower mortgage rates could lure more sellers back to the market soon: “The decrease in rates we saw in August might entice homeowners who were on the fence to finally list their homes.”

Homes Are Staying on the Market Longer

In a sign of the slowing market, homes are taking longer to sell. The typical home spent 53 days on the market in August, seven days more than the previous year, marking the slowest August in five years. This gives buyers more breathing room when making offers, as they no longer need to rush decisions in a fast-paced market.

The extended time on the market is just another indicator that the balance of power is shifting from sellers to buyers.

Conclusion

‍The summer housing market slowdown is providing buyers with more options and better negotiating power. With rising home inventory, increasing price cuts, and falling mortgage rates, the tables may have turned in favor of those looking to purchase a home. For buyers waiting for the right moment, now could be the perfect time to make a move.