Home sellers are ‘waking up to reality’ and are slashing prices to combat stubbornly high mortgage rates

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Spring homebuying season has officially arrived, and there’s a silver lining for prospective buyers: sellers are cutting prices as homes linger on the market and mortgage rates remain elevated.In March, the share of listings with price cuts reached nearly 17%—the highest for any February since 2016—according to Realtor.com. That trend could point to better deals for buyers this spring.“This high share of price reductions could signal further price softening in the coming months as sellers adjust their expectations to market conditions,” said Danielle Hale, chief economist at Realtor.com.Homes are also taking longer to sell. The average time on the market is now 66 days, up five days from this time last year. Meanwhile, mortgage rates remain high at 6.74% as of Monday, well above the sub-3% levels seen during the pandemic. Still, some experts note that rates are trending downward.Inventory is also building. According to Kenon Chen, executive vice president of strategy and growth at Clear Capital, the number of homes on the market is at its highest since August 2019, while January sales remained sluggish. Given that backdrop, Chen told Fortune it’s no surprise sellers are adjusting prices.However, “should rates continue their downward trend over the next month, we could see more buyers come off the sidelines, driving less need for price reductions as we head into the spring buying season,” he said.Many sellers have also pulled their listings altogether. Home delistings surged 64% in December year-over-year to 73,000, according to CoreLogic data cited by The Wall Street Journal.Spring homebuying trendsThe national median sales price for a home is currently $412,000, per Realtor.com, but prices are far steeper in the fastest-growing states. In Massachusetts, the median home price tops $722,000, while in Washington State it’s approaching $600,000.Still, agents and analysts nationwide have noted the wave of price cuts—driven by persistently high mortgage rates and longer listing periods.Brett Johnson, a real estate agent and investor in Colorado, told Fortune that he’s observed price drops of 3% to 5%, particularly in Denver and Boulder. Sellers who listed too high at the end of 2024 are “waking up to reality” and adjusting prices to stay competitive.“Well-priced homes in desirable areas still move quickly, but anything sitting for too long gets discounted fast,” said Johnson, who owns Denver-based New Era Home Buyers. “Buyers are more cautious with higher mortgage rates, and affordability is driving the market more than ever.”