Homebuyers may still be contending with elevated mortgage rates, but they're gaining something many haven't had in years: negotiating leverage.
A record 46.2% of U.S. home sellers provided concessions to buyers in May, up from 43.1% a year earlier and the highest share ever recorded for the month, according to new data from Redfin.
With more sellers competing for fewer active buyers, concessions are increasingly being used to move transactions across the finish line.
Seller concessions can take many forms, including contributions toward closing costs, funds for repairs, mortgage rate buydowns, homeowner association fees, or other expenses that reduce a buyer's upfront financial burden.
"There are two main reasons concessions are so prevalent: Buyers have leverage, and some sellers are pricing too high," Amanda Peterson, a Redfin Premier agent in Dallas, said in the report.
"With more inventory and less competition, buyers can be selective and negotiate for everything from repairs to closing costs. Sellers — especially those with dated homes that haven't been renovated in decades — are increasingly willing to make concessions because they can be the difference between securing a buyer and leaving their listing sitting on the market."
Affordability Pressures Continue
The rise in concessions comes as affordability remains a major obstacle for many prospective buyers.
Mortgage rates remain elevated compared to pandemic-era lows, while home prices in many markets continue to hover near record levels. Redfin noted that economic uncertainty, inflation concerns, and job-security worries have further tempered buyer demand, allowing inventory to accumulate in many regions.
For mortgage professionals, the trend presents an opportunity to educate borrowers who may be focused solely on mortgage rates.
While many buyers continue waiting for rates to decline, concessions can help reduce cash-to-close requirements or offset financing costs through seller-funded rate buydowns and other incentives.
The report suggests that in today's market, affordability relief may increasingly come through negotiation rather than lower interest rates.
Sun Belt Markets Lead In Concessions
Seller concessions were most common in several Sun Belt markets where inventory has surged following aggressive post-pandemic homebuilding activity.
Nashville led the nation, with 75.5% of home sales including seller concessions in May. Charlotte followed at 71.4%, followed by Atlanta at 68.7%, Phoenix at 65.6%, and Raleigh at 64.1%.
Many of these markets experienced extraordinary demand during the pandemic housing boom but have since seen conditions swing sharply in favor of buyers.
As inventory expanded and affordability deteriorated, sellers increasingly turned to concessions to remain competitive.
The largest year-over-year increase occurred in Orlando, where the share of sellers offering concessions rose to 58.6% from 38.3% a year earlier. Phoenix and Nashville also posted substantial increases.
Not Every Market Is A Buyer's Market
The trend is far from universal.
In New York, just 2.9% of home sellers offered concessions in May, the lowest share among the metros analyzed by Redfin. San Jose followed at 5.9%, while San Francisco came in at 14.9%.
Those markets continue to exhibit stronger demand relative to available inventory, limiting buyers' ability to negotiate concessions.
Redfin noted that San Francisco remains one of only a handful of seller's markets nationwide, where buyers often compete for available homes rather than the other way around.
Price Cuts And Concessions Increasing Together
Perhaps the clearest sign of shifting market leverage is the growing number of sellers who are both reducing asking prices and offering concessions.
According to Redfin, 15.7% of homes sold in May featured both a price reduction and a seller concession, up from 12.8% a year earlier and the highest May share on record.
The combination suggests that some sellers are being forced to adjust expectations on multiple fronts as they work to attract buyers in an increasingly competitive environment.
For originators, the trend may offer another talking point for hesitant borrowers.
While mortgage rates remain a challenge, today's buyers are gaining leverage that was largely absent during the frenzied seller's market of 2021 and 2022. In many cases, that leverage is translating into meaningful savings through concessions, price reductions, or both.
