Sellers Are Cutting Prices at the Highest Rate in Years. Here's Why That's Not the Whole Story

Mortgage rates topping 7% have pushed a lot of buyers to the sidelines this fall, and sellers are responding the only way they can. According to Realtor.com's latest monthly report, 20.8% of listings nationally carried a price cut in September, the highest September rate since 2018 and the highest for any month since October 2022. This isn't isolated either; all four US regions and 36 of the 50 largest metros are running above their year-ago price-cut levels.

Most of these sellers don't have a choice

"A lot of the people selling right now have to sell rather than simply choosing to sell, because of a job relocation, divorce, debt, or another life event, so they have to meet buyers where they are," says Russell Faucette, principal broker and co-founder of Omada Real Estate in Salt Lake City. Realtor.com senior economist Jake Krimmel adds that this fall's slowdown arrived earlier than usual. "Demand rarely picks up much this time of year regardless, but the rate environment and underlying geopolitical uncertainty made sure the housing market's fall stall came early this year."

The West is getting hit hardest

Price cuts in the West jumped 1.8 percentage points to 22.8%, the largest year-over-year increase of any region. In Salt Lake City, a full third of active listings carried a discount last month. Denver sat at 31.5%, and Portland, Oregon at 31.3%. The Northeast stayed the most insulated at 15.2%, with the Midwest at 20.7% and the South in the middle at 21.8%.

Cutting the price isn't actually fixing the problem

Here's the part sellers and buyers both need to understand. "This is much more interest-rate-driven than price-driven," Faucette says. "Roughly speaking, a 1-percentage-point increase in mortgage rates can reduce a buyer's purchasing power by around 10%." A buyer who could afford a $500,000 home at 6% has roughly the buying power of $450,000 at 7%. Home prices haven't dropped enough to close that gap on their own. Denver agent Michelle Schwinghammer sees the same pattern from the buyer side. "It's not just the price of the house. Insurance costs have become outrageous, while gas, energy, and grocery prices are putting enormous pressure on household budgets just to cover necessities. A price reduction on a house doesn't solve an affordability problem that extends well beyond the mortgage payment."

Not every seller is playing this game

Nationally, delistings held steady at 5.6%, meaning most sellers aren't pulling their homes off the market. But that headline number hides two very different groups. "Sellers who need to sell are adjusting their price, offering concessions, and doing what they need to do to compete," Faucette says. "Sellers who don't have to sell are much more likely to pull the home off the market rather than accept a lower price or terms they aren't comfortable with." In Denver, Schwinghammer says many of those sellers are simply waiting for spring, a bet that isn't guaranteed to pay off if rates and inventory keep climbing.

What this means if you're buying or selling

If you're a seller pricing based on where the market was a year or two ago, this is your sign to look at where it actually is now rather than catch up to it late. If you're a buyer, more listings with price cuts mean more room to negotiate on price, condition, and terms, not just the number on the sign. Either way, the national numbers only tell part of the story. If you want to know what this actually looks like on your street, reach out and let's talk through it.