Not long ago, Samantha and her husband were house hunting in Phoenix. Like many first-time buyers, they were frustrated. Listings popped up with price tags that made their mortgage broker wince. Homes needed updating, but sellers were still holding out for peak-pandemic prices. So they waited. And waited.
Then something shifted.
In May, Samantha noticed the same three-bedroom ranch that had been sitting for months finally dropped its price—by nearly $25,000. That was enough to get her back in the game. And she wasn’t alone.
Across the U.S., price cuts on homes for sale are becoming not just common, but strategic. According to Realtor.com’s latest data, 19.1% of homes listed in May saw a reduction in asking price—the highest percentage recorded for any May since 2016. Compared to just under 17% the year before, this signals a subtle but important change: sellers are beginning to compromise.
For five months now, price reductions have trended upward, with the South and West leading the charge. There, roughly one in five listings slashed their prices, while the discount rate in the tight-supplied Northeast hovered around a modest 11%. The geographical gap is no coincidence. In cities like Tampa, Phoenix, and Denver, inventory has ballooned in recent years, thanks in part to a post-COVID construction boom. But buyer demand? Not so much.
Danielle Hale, chief economist at Realtor.com, summed it up simply: “Sellers are adjusting expectations.” And perhaps they must—especially when buyers like Samantha are no longer willing to stretch every financial fiber just to land a starter home.
Phoenix, for instance, now leads the pack. More than 31% of its listings cut prices last month. The typical home there now lists for $525,000—down more than 3% from a year ago. In Tampa, nearly 30% of homes saw price drops, with median prices slipping 1.6%. Denver, which once saw bidding wars over fixer-uppers, posted the third-highest markdown rate. Roughly 29.4% of listings took a price hit, with average asking prices falling almost 6%. Houses are sitting on the market longer, too—about two weeks longer than before the pandemic hit.
These cities, once red-hot, have cooled. Not from lack of inventory—on the contrary. Denver’s for-sale inventory has exploded, rising more than 60% year-over-year and nearly doubling compared to pre-COVID levels. Phoenix and Tampa followed similar patterns, with 24% and 30% annual increases in active listings, respectively. And yet, despite more choices, buyers remain hesitant.
You can blame high mortgage rates—hovering stubbornly around 7%—or shaky consumer confidence. Or both.
That hesitation shows up not just in prices, but in time. Homes now linger on the market for an average of 51 days, up six days from the same time last year. In Nashville, the slowdown is even sharper, with homes sitting nearly three weeks longer than in May 2024. Even with new listings rising 7.3% year-over-year nationwide, buyers aren’t rushing. In fact, the total number of pending home sales dropped 2.5% from a year ago, underscoring just how careful people are being.
In contrast, Baltimore bucked the trend. It saw its median list price jump more than 10% in May—the largest annual increase among major metros. Meanwhile, Austin took the hardest fall, with prices down 6.3% and price cuts nearing 30%.
The overall national picture? A typical U.S. home now lists for about $440,000, a figure that has barely budged in a year. Square-foot prices inched up just 0.6%, suggesting that we’re close to hitting a ceiling, at least for now.
From a historical perspective, that’s still a steep climb. Since May 2019, the median listing price has surged 37.5%, while cost per square foot jumped over 53%. For most middle-class families, those numbers are more than just data—they’re deal-breakers.
So why does inventory keep rising if demand remains soft? Part of the answer lies in new construction. Western and Southern regions have seen a surge in building over the last few years, outpacing other areas like the Northeast or Midwest. Cities such as Austin and Denver were ground zero for pandemic-era building sprees. Now, they’re sitting on a glut of unsold homes.
Washington D.C., Las Vegas, and San Diego posted the largest annual jumps in inventory among major metros, with D.C. leading at a 75.6% increase. But even with that growth, 28 of the 50 largest cities still haven’t regained their pre-COVID inventory levels. Those that have—like Denver (+100%), Austin (+69%), and Seattle (+60.9%)—all share one trait: aggressive building in recent years.
Hale explains the imbalance clearly: in areas like New England and the Great Lakes, where new housing has lagged significantly, inventory continues to fall short. It's a supply-and-demand story, yes—but also a supply delay story.
Take Milwaukee. Its new listings jumped nearly 30% year-over-year in May, the largest in the nation. Charlotte and Boston followed suit with double-digit growth. Yet month-over-month, new listings dropped slightly—down 1.4%—hinting at a slower-than-usual spring season.
Still, there’s a silver lining. More sellers are blinking first. More buyers, like Samantha, are realizing they may finally have leverage. But that doesn’t mean it’s easy.
The affordability crunch is still real. Mortgage payments remain sky-high compared to pre-pandemic standards. Wages haven’t kept up. And even when prices come down, they’re often not enough to offset a 7% interest rate.
Samantha and her husband eventually made an offer—below asking price. It was accepted. They’re set to close this month. Their story isn’t unique, but it is telling. Sellers who once dreamed of bidding wars are now coming back to Earth. And buyers, once shut out completely, are stepping cautiously through the door.
The game isn’t over. But the board has shifted？