(Reuters) – Sellers cut prices on nearly one quarter of U.S. homes listed in June, an increase from May, showing buyers still call the shots in the U.S. housing market, real estate website Trulia.com said on Wednesday.
Sellers lowered asking prices at least once on 24 percent of homes listed as of July 1 compared with 22 percent the prior month, Trulia said in a report provided to Reuters before official release.
More job creation and employment security are needed for a sustained rebound, San Francisco-based Trulia said. Swelling inventory, under the weight of record foreclosures and typical summer selling, remains a formidable obstacle.
“We’re seeing more and more sellers reduce their home listing prices to attract potential buyers, who definitely have the upper hand in negotiations this season,” said Trulia Chief Executive Pete Flint.
Home buying demand came to a screeching halt after the April 30 deadline to sign contracts for up to $8,000 in tax credits.
Applications to purchase houses sank to 13-year lows, according to the Mortgage Bankers Association, as the spring race for tax credits stole from summer sales.
“The slow start to the summer season is creating major concern that we are heading toward a double-dip in the second half of this year” in the housing market, Flint said in a statement.
Sellers slashed a total of $27.3 billion in June from asking prices, more than $26.7 billion in May, $25 billion in April and $22.8 billion in March, according to Trulia. The average discount on reduced homes held at 10 percent from the original listing.
More than a year of the tax incentive helped put U.S. housing on solid footing. But the uninspiring jobs market keeps many potential buyers from making such a large commitment.
The unemployment rate fell in June to 9.5 percent, the lowest level in almost a year, but only because many jobless workers gave up on the search.
Sellers cut asking prices at least once by at least 30 percent on homes listed in 22 of the largest U.S. cities last month. That is more than double the 10 cities in May with such a high share of reduced prices.
Trulia said it expects prices will drop by up to 5 percent broadly, and by as much as 10 percent in areas hardest hit by high unemployment and foreclosures.
Prices have fallen about 30 percent on average from their peaks four years ago, according to the Standard & Poor’s/Case-Shiller indexes.
Some markets, such as San Francisco, are seeing price appreciation. There are pockets of good news, but overall that is not the case for most of the country, Trulia said.
Minneapolis, Minnesota for the third straight month had the largest share of sellers cutting prices, with a rate of 40 percent. Growing inventory is forcing greater competition among sellers, according to Trulia.
Cities in the Western states where fewer sellers were lowering prices in much of the first half had a June setback.
Oakland, California, led the list, with 18 percent of sellers lowering home prices, a 38 percent surge in the month. Other cities that saw 20 to 25 percent spikes in the share of sellers cutting prices were San Diego, California; Omaha, Nebraska; Virginia Beach, Virginia; Honolulu, Hawaii; San Antonio and El Paso in Texas as well as Las Vegas.
Price-cutting on luxury homes listed at $2 million or more stayed elevated, with an average discount of 14 percent from the original listing price, Trulia said. Homes in this category account for less than 2 percent of total inventory, but almost one-quarter of total dollars slashed from all homes for sale.
(Editing by Andrew Hay)