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The Housing Market Reaches a Turning Point as Sellers Slash Asking Prices

New-Home Sales

The Housing Market Reaches a Turning Point as Sellers Slash Asking Prices

Surging interest rates are rapidly cooling homebuyer demand, and a lack of competition is forcing some sellers to drop their asking prices

June 16, 2022
Home seller pushing house back to peak high on graph

Over 25% of homes currently on the market have experienced price reductions in the wake of fast rising interest rates putting a damper on buyer demand, and that number is likely to grow as the market decelerates, MarketWatch reports. In a normal housing market, nearly one-third of all home listings take a price cut before they’re sold, but just 14% of all homes sold in the spring of 2022 were purchased at a reduced price. 

As more buyers back out of an overheated market, sellers in some areas are left with no choice but to accommodate a changing buyer pool. Though overall home prices aren’t expected to see any significant changes in 2022, home appreciation could level out in 2023, experts say. 

“Rising rates and the shift in the economy has slowed down the super-eager buyers,” Mike Simonsen, co-founder and CEO of Altos Research, a real estate analytics firm, told MarketWatch. “And what we’re feeling is the speed of the shift.”

But don’t expect prices to hit rock-bottom just yet. “There is nothing in the data yet that shows an indication of home prices crashing,” Simonsen said. But “there is an indication of probably zero home price appreciation in 2023.”

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