Some industry reports are buzzing about trends of home sellers lowering their asking prices, unable to command the lofty numbers seen over recent years. Should homeowners worry that their record-high equity is slipping away? And for buyers, could this spell a long-awaited opportunity?
While listing price drops are becoming more prevalent in some markets, the overall market trend tells a different story: Home prices are at all-time highs. The national median single-family existing-home price hit a record high in the second quarter, according to National Association of REALTORS®’ research.
“Certain markets are seeing some price declines, while other markets are seeing better than 2% appreciation,” says Lawrence Yun, NAR’s chief economist. Slight dips or not, rest assured: The “typical American homeowner ... has accumulated a sizable equity gain, and on average, it is still positive and rising,” Yun adds.
Over the last five years, the average homeowner’s wealth has increased by $140,900, NAR’s research shows.
That said, home sellers may be finding more of a cap on what they can command for their home, which has put real estate professionals in the position of educating clients amid changing market forces. Real estate experts urge caution and perspective.
“Price reductions are not red flags—they’re signals,” Ryan Melvin, a real estate pro with Huntington & Ellis, A Real Estate Agency, in Las Vegas, recently told Real Estate Today. “They reflect how the market is moving and offer buyers leverage and opportunity.”
Why Some Home Prices Are Moderating
Nationally, housing inventories are rising, up about 16% in June compared to a year earlier, according to NAR data. That means sellers are facing more competition.
With this in mind, Melvin warns sellers not to price homes expecting a rapid appreciation of 4-6% annually—an anomaly seen in recent years.
Also, Yun notes that some markets may be experiencing more variability than others. For example, the condo market—particularly older condos—in Florida have “seen quite a steep rise in inventory,” he notes. “Consequently, there are some price declines of 10% from one year ago—that is not unusual.”
But even as some markets see temporary adjustments, Yun notes that overall job growth remains strong and wages are up near 4% annually. “This suggests that buyer power might improve over time as wages outpace price growth,” he says.
What Sellers Should Know About Pricing
Given that price adjustments are occurring, real estate pros are having talks with home sellers about new realities.
“Sellers can no longer rely on aggressive pricing to draw offers immediately,” Melvin says. “Many homes today are initially priced too high, based on outdated expectations of rapid appreciation. Sellers are learning that to stay competitive, they have to adjust.”
Here’s how real estate pros are coaching their clients:
Watch pending sales closely. Instead of focusing on closed sales, focus on pending sales to guide the initial asking price. “Pending sales are next month’s data,” Melvin says. “Pending sales show what homes actually went under contract recently.” This helps gauge what prices buyers are currently willing to pay. He also watches other homes’ price history and days on the market to educate his sellers on setting a competitive initial asking price.
Price with competition in mind. “Pricing your home competitively at the beginning is important,” Melvin says. “That may mean it’s between 3% and 5% less than the absolute most recent sale or recent pending sales … The difference between a $375,000 house and a $390,000 house might be the difference between zero showings and multiple showings.” Overpricing from the get-go excludes potential buyers.
Educate clients about any market shifts. Show clients the latest data—from increased inventories to the latest price adjustments—to illustrate how the market could be changing. “As agents, we need to do a better job at educating our clients—not telling them what they want to hear but what’s actually happening,” Melvin says.
Adjust when needed—and make it count when you do. To generate renewed interest in a property that is starting to linger, Melvin suggests a well-positioned price reduction. “It’s important to have price reductions that actually move the needle,” Melvin says. “Typically, a price reduction of 2% to 5% can increase showings and generate offers.”
Time reductions just right. Once the home is listed and asking price is set, sellers likely will want to test the market reaction for about two weeks to gather feedback. “If showings are slow or buyer interest isn’t strong, a midweek price reduction can be a smart move,” Melvin says. “Reducing on a Wednesday, for example, means the listing will show up in Thursday’s ‘hot sheet’ for agents and buyers preparing for weekend tours.” Every pricing change—particularly an aggressive, well-timed reduction—could potentially renew attention and place the home back on the alert systems for buyers.
For Buyers: Seize the Day
Buyers may view price adjustments as an opportunity, real estate pros say. A home lingering on the market could send a message to buyers that there’s more opportunity to negotiate on price, terms or even repairs.
Melvin closely watches days on the market for his buyer clients. But “a common myth is that a home sitting on the market for 60 days or more must have serious issues,” he says. “In reality, it’s often a case of early overpricing or poor timing. … Listings with longer market times can also give buyers more leverage: more room for negotiation, less competition and time to make a thoughtful, pressure-free decision.”
Also, overpriced homes shouldn’t be dismissed; they could be an opportunity for buyers, too. “It’s an opportunity to negotiate,” he tells his buyers.
Stay Informed to the Changing Market
Even with some markets witnessing listing price adjustments, Yun dispels any fears that this equates to a dire trend for the housing market or any indicator of significant price declines soon to come. He points to historically low mortgage delinquency rates and rising appreciation.
The real estate market’s outlook is bright, he says. NAR is forecasting existing-home sales to increase by the end of 2025 by 3% and surge by 14% in 2026, according to the association’s latest housing forecast. Also, median home prices are projected to moderate to a 1% growth this year and then jump 4% in 2026.
Over the long-term, homeowners tend to come out on top. “Rents generally rise year after year,” Yun says. “For homeowners, 90% take out a fixed rate mortgage ... over time, one finds that homeowners build wealth, while renters expend more and more.” Indeed, homeowner’s median net worth is projected to be $430,000 versus renter’s median net worth of $10,000, according to 2025 projections.
