Home sellers continued cutting their prices in February in a bid to contend with a growing number of properties lingering on the market, along with stubbornly high 30-year fixed mortgage rates.
The share of housing inventory with price cuts was higher than in any February since 2016, reaching 16.8% after experiencing an uptick of more than 2 percentage points since last year, in what Realtor.com® Chief Economist Danielle Hale is calling a "highly unusual seasonal growth."
"This high share of price reductions could signal further price softening in the coming months as sellers adjust their expectations to market conditions," says Hale.
The February 2025 Monthly Housing Trends report from Realtor.com reveals that sellers are trying to adapt to the slower market, signaling that a cooldown in price growth could be just around the corner.
Regionally, the South and West saw the greatest surge in homes with price reductions at 2.1 and 2.5 percentage points, respectively, compared with last year. Meanwhile, the share of inventory with price cuts was just 0.2 percentage points higher in the Northeast and a modest 1.2 percentage points higher in the Midwest.
Overall, 45 of the nation's 50 largest metros saw the number of homes with price cuts increase since February 2024, up from 41 metros in January.
Denver saw the most dramatic jump, at 8 percentage points, followed by Charlotte, NC (+6.4 percentage points), and Tucson (+6.3 percentage points).
Homes are staying on the market longer
The typical home sat unsold for 66 days in February, which is five more days than the same time in 2024, suggesting that prospective homebuyers are in no rush to seal the deal.
This marks the 11th month in a row where homes spent more time on the market compared with the previous year. But the silver lining is that the time the median home spends on the market is still 11 days less than pre-pandemic levels.
Regionally, homes waited around for a buyer in the Midwest eight days more in February year over year, seven days more in the South, four in the West, and just two in the Northeast.
Overall, in all four regions, time on the market for a typical home was at or below pre-pandemic levels, according to Realtor.com researchers.
Overall home inventory and new listings are on the rise
In terms of inventory levels nationwide, there were 27.5% more homes actively for sale on a typical day in February compared with the same time in 2024, marking the 16th consecutive month of annual inventory growth.
Looking at the February figures, it becomes apparent that more homeowners have decided to take the plunge and put their property on the market, with new listings going up 5.1% above last year’s levels. However, this is a decrease from January’s uptick of 10.8%.
"This puts new listing activity at its highest February level since 2021," says Hale. "While rates remain elevated, it is possible that we might be seeing that chiseling effect starting as sellers may grow tired of waiting for significant changes in rates."
The Western market continued booming in February, with the number of listings skyrocketing by 37.4%. The South was a close second, with inventory growing by 29.9%.
Much like in January, the Midwest and Northeast struggled to catch up, with the number of listings increasing by 18.7% and 9.2%, respectively.
Turning to new listings, the West emerged as the indisputable leader, with fresh home stock surging by 14.4% year over year. In the South, new listings grew by a mere 3.7%, and they decreased by 3.2% in the Midwest and 3.4% in the Northeast.
Meanwhile, the number of pending listings, referring to homes under contract but not yet sold, continued to rebound nationwide in February, inching up 1.2% from the same time last year. It's still a far cry from December's gain of 7.4%.
Hale blames this slowdown at least in part on mortgage rates being higher in January and February compared with the previous months.
Looking ahead, Realtor.com economists predict in their 2025 forecast that with the waning of the "lock-in" effect, which has kept reluctant sellers on the sidelines, home sales should rise by 1.5% this year.
Smaller listings are lowering median home prices
The median price of homes for sale this February slipped 0.8% from last year, settling at $412,000. However, more small homes are hitting the market this year, causing the median list price to drop relative to 2024.
The median list price per square foot, which controls for size, went up by 1.2%, indicating that home values are shrinking.
The South saw the biggest drop in the median asking price, at 2%, followed by the West and Midwest, at 1.2% and 0.2%, respectively. In the Northeast, the median list price was flat.
If taking into consideration the size of the typical home by looking at price per square foot, prices grew by 2.9% in the Northeast, 1.6% in the Midwest, and 0.9% in the West, but were down 0.1% in the South, where inventory growth has been greatest.
Among large metros, Cleveland saw the biggest surge in the median list price, at 14%, followed by Providence, RI, at 7%, and Hartford, CT, at 6.6%.
Read more at Realtor.com
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