The price-cut picture is changing as home listings rise and buyers gain leverage

Buyer outlook improves nationally

"Buyers today are in a stronger bargaining position than they’ve been in a long time," said Orphe Divounguy, senior economist at Zillow Group Inc. (Nasdaq: ZG). "Affordability is still a challenge, but it’s improved."

He said the typical mortgage payment is 1.3% lower than it was a year ago, and despite higher home prices, mortgages are still roughly 20 basis points below where they were last year.

Divounguy said, nationally, more homes are on the market now than in August 2020, and inventories are up 20% from a year ago. That means buyers who can afford to act now are in a favorable position.

Some pockets of the country are seeing significant gains in inventory, especially the South, where homebuilders responded to migration and other demand drivers by building a lot of new homes. Those same areas have considerably more houses on the market now.

But other factors, like insurance costs, could also be playing a role in inventory upticks for markets like Florida, Louisiana and Texas, Divounguy said.

"When insurance costs rise, it hurts affordability and it becomes more difficult for some buyers to transact in those markets, so we could expect to see inventory continue to rise there as well," he added.

Surging insurance rates are but one example of how the cost of homeownership has also risen. The average homeowners insurance premium per policy increased 8.7% faster than the rate of inflation between 2018 and 2022, according to data analyzed by the U.S. Department of Treasury's Federal Insurance Office in a January report.

A recent LendingTree analysis also found median property taxes in the U.S. rose by an average of 10.4% between 2021 and 2023.

More inventory may lead to price cuts

As inventory grows, competition among sellers intensifies, meaning some homeowners may be forced to slash their prices.

According to a recent report by real estate analytics firm Epum, 302,260 homes for sale on Realtor.com in March saw a price cut. That represented 33.9% of the 892,561 homes on the market in the U.S. at the end of March.

"For the longest time, sellers had nothing to compare [listing prices] to," Divounguy said. "If you have no [comparables] on the market, it’s very difficult to price your home correctly. If you come on the market with a price but aren’t really aware of how the market is changing or don’t have a similar home nearby to compare your home to, you get it wrong. Then you have to make a downward adjustment to the price.

"That’s why we’re seeing a lot of price cuts right now," Divounguy continued.

It’s worth noting a price cut doesn’t always mean a home sold for less than area comps. Agents will occasionally list a home on the higher end to test the market or create room for negotiation. Epum’s research shows that even during the pandemic — when home prices were surging and buyer demand was insatiable — 18.7% of U.S. homes for sale in March 2021 underwent a price cut.

Good news for first-time buyers?

According to Zillow’s data, April 2025 saw the most price cuts of any other April — historically one of the hottest months for the housing market — since 2018.

This is especially good news for first-time buyers — the share of which are at a record low — as it means the gap between buyers and sellers is narrowing.

"First-time homebuyers are basically renters who saw rents increase faster than wages during the pandemic, whereas home sellers saw their home equity soar and their financial condition improved tremendously, so there was a bit of a gap between potential home buyers and sellers," Divounguy said. "That gap is finally closing, and it makes for a healthier, more liquid housing market."

Despite that, he believes the market is still in favor of sellers nationally.

"This April, we didn’t get the heat we normally get and part of that was due to policy uncertainty," he said. "We had a lot of news about trade wars, and that affects decision making. But we’re past peak policy uncertainty. The stock market has recovered, affordability is improving and mortgage rates remain lower than last year.”

'Don’t time the market'

Divounguy said interest rates shouldn't dictate homebuying decisions. The low interest rates observed during the pandemic were more anomaly than standard, and big drops typically accompany financial crises, such as the 2008 downtown, the Covid-19 pandemic or the dot-com bust in the early 2000s.

"Over the long run, 7% is the norm. And trying to wait until the [Federal Reserve] cuts interest rates is misguided," Divounguy said.

He added when the Fed cut rates last year, mortgage rates actually increased because they're more influenced by long-term Treasury yields.

Divounguy said buyers should instead better understand their budget and how that correlates with real-time mortgage rates to get a more nuanced understanding of their overall purchasing power.

"It’s difficult to forecast where mortgage rates are headed, so I tell people, don’t time the market," he said. "Instead, get your finances in order and figure out what you can actually afford."

After years of fierce competition and rising prices, buyers are beginning to regain control in many U.S. housing markets. With listings climbing and price cuts becoming more common, 2025 is shaping up to be a year of renewed opportunity—especially for first-time and out-of-state buyers who were previously priced out.

For relocating buyers, this shift signals a golden window to enter desirable markets with less pressure and more options. It’s not just about lower prices—it’s about leverage, choice, and negotiation power. And while affordability remains a challenge, improving inventory and stabilizing rates are helping to close the gap between buyer budgets and seller expectations.

Bottom line: if you’ve been waiting on the sidelines, now’s the time to prepare. Markets are evolving—and savvy buyers are ready to make their move.