More than one-third of home sellers reduced their asking prices in February, with the average cut totaling 7.3% or nearly $41,000, according to a Redfin report. The share of households lowering prices in February represented the highest February share on record, dating back to 2012. The average percentage drop was the highest for February since 2023.
"Price cuts are on the rise because it is a buyer's market," Redfin said. "There are hundreds of thousands more home sellers in the market than buyers because buyers have been spooked by high mortgage rates, high prices, and economic uncertainty." This trend directly impacts mortgage loan originators and brokers, as it can signal softening demand and increased negotiation power for borrowers, potentially affecting loan volume and property valuations.
The brokerage noted that price reductions are seasonal, with December typically seeing the highest frequency. Once spring begins, sellers are less inclined to reduce their initial listing prices. In six of the past 10 years, May recorded the lowest share of price cuts, while April held the lowest share in three of the past 10 years, including projections for 2024 and 2025.
Redfin recently reported that sellers who removed their homes from the market during winter are now relisting them to capitalize on the spring market. Nearly 45,000 homes returned to the market in January, marking the largest January volume in records dating back to 2016. This influx of listings can increase housing supply, which may influence mortgage demand and property values.
Redfin's analysis of price cuts does not include sellers who reduced their asking prices before their homes were officially listed. Consequently, the actual share of home sellers who cut their price may exceed the reported 34%.
Redfin also found that the longer someone owns their home, the lower the probability of a price reduction. Less than one-third of February 2026 sellers who had owned their homes for at least seven years lowered their price. This contrasts with 34.9% of sellers who had owned their homes for two to seven years.
Many individuals who purchased homes in the past seven years did so during the peak of the pandemic, when prices were rapidly increasing. Now that prices have adjusted in some areas, more recent buyers risk financial losses if they reduce their prices to secure a buyer. Many of these sellers initially set high prices to recoup their investment, only to find they must lower their expectations as the market has shifted, the realty firm stated.
Sellers in Texas and Florida are most likely to reduce their prices, largely due to increased competition from new construction. Conversely, sellers in the San Francisco Bay Area are least likely to implement price cuts. This regional variation highlights the localized nature of housing market dynamics, which mortgage professionals must consider when assessing property values and borrower qualifications.
