Shortage of homebuyers forces many sellers to lower prices or walk away
as sales slump drags on
[September 09, 2025] By
ALEX VEIGA
LOS ANGELES (AP) — Skyrocketing housing values and a shortage of homes
on the market gave homeowners the upper hand for years when it came time
to sell. That’s no longer a given.
Across the country, it’s getting tougher for sellers to drive a hard
bargain. A dearth of home shoppers who can afford to buy and uncertainty
about the outlook for the economy, jobs and mortgage rates is putting
pressure on sellers to give ground at the negotiating table.
In some markets, mainly in the South and West, homeowners who are eager
to sell are more likely to give buyers a better deal. This could include
a lower price, up-front money to nudge down the buyer’s mortgage rate,
and funds for closing costs and any repairs or improvements that may pop
up after the home inspection.
The reasons: Would-be buyers balk at what they view as unreasonable
asking prices, while at the same time new construction is giving buyers
more options and putting pressure on sellers to make their homes more
appealing.
As a result, while the national median home listing price rose slightly
in July, some metro areas saw a decline, signaling a reversal in the
power dynamic between buyers and sellers. It’s rare to see the type of
eye-popping bidding wars that exploded home values by roughly 50%
nationally earlier this decade. Low-ball offers are more common.
Despite this hopeful trend, the housing market remains mired in a slump.
Sales of previously occupied U.S. homes are running about 1.3% below
where they were through the first seven months of last year, when they
sank to their lowest level in nearly 30 years.
The national median home listing price rose slightly in July from a year
earlier to $439,450, according to Realtor.com. The real estate listing
company found the most a homebuyer who earns the median U.S. household
income can afford to spend on a home is $298,000. The analysis assumes a
20% down payment and a 30-year mortgage at a fixed rate of 6.74%. By
those criteria, 7 out of 10 home shoppers are priced out of the market.
Homes linger on the market as sales slow
The housing market has been in a rut since 2022, when mortgage rates
began climbing from historic lows. The number of homes available for
sale sank while prices kept rising.
Nationally, more homes are going on sale and remaining unsold longer
because buyers have been unwilling or unable to make a deal. Active
listings — a tally that encompasses all homes on the market except those
pending a finalized sale — increased in July for the 21st month in a
row, climbing nearly 25% from a year earlier, according to Realtor.com.
The tide turns slowly
The inventory of homes for sale across the U.S. has increased gradually
as the market has slowed and is now at a level where supply and demand
are more balanced. But in states like Texas and Florida, the number of
homes on the market has climbed sharply, partly because those states are
hotbeds of new home construction.
Home shoppers may now have more leverage relative to sellers in the
South and West, where home inventory has risen in the single digits,
compared to pre-pandemic levels. Conditions are tougher in markets in
the Midwest and Northeast, where the supply of homes remains 40% and 50%
below pre-pandemic levels, respectively, according to Realtor.com.
Sellers feel the pinch and budge on price
After roughly two months on the market and three open houses, Doug
McCormick’s home has yet to receive a single offer.
The retired business owner and his wife initially listed the 4-bedroom,
4.5-bath house located in Evergreen, a mountain community about 30 miles
west of Denver, for $1.3 million. They lowered their asking price to
about $1.28 million. That, too, failed to bring in a buyer.
McCormick, 80, says he’s hoping mortgage rates ease a bit and bring out
more buyers. But he’s also considering just renting the property.
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A for sale sign stands outside the home of Doug McCormick, which has
been up for sale for almost two months Tuesday, Aug. 26, 2025, near
Evergreen, Colo. (AP Photo/David Zalubowski)
 “That’s something that’s kind of in
the back of my mind,” he said. “I keep reminding myself you only
need one buyer.”
McCormick’s situation is not unique. As demand has slowed, more
sellers have resorted to lowering their initial asking price — often
multiple times — to no avail.
“Even though we are seeing a substantial amount of
price reductions, sometimes it’s not enough to move the home, it’s
still sitting,” said Annie Foushee, an agent with Redfin in Denver.
The median home listing price in Austin fell 4.9% in July from a
year earlier, while in Miami it dropped 4.7%. Among other metro
areas that had sharp drops in their listing price were: Chicago
(4.4%), Los Angeles (4.2%) and Denver (4%).
When buyers are also sellers
Lindsay Olesberg and her husband, John, know what it’s like to
navigate both sides of the housing slump.
The couple listed their 4-bedroom, 3.5-bath home outside Albuquerque
for $835,000 in June 2024 after John, a research scientist, got a
new job in Texas. The plan: Sell their house, move to Austin and buy
a home there. It took more than a year, during which the couple
lowered their asking price several times, temporarily took the home
off the market and had some offers fall through.
In the end, they agreed to sell for $40,000 below their original
listing price.
Buying a home was much easier. The Olesbergs had little trouble
finding homes they liked and could afford in Austin, where home
inventory was up nearly 60% in July compared to pre-pandemic levels.
They bought a five-bedroom, three-bath house in Austin for $735,000,
or $30,000 below its initial listing price. The seller also agreed
to cover $1,000 in fees.
“We got less for our house in New Mexico than we would have wanted,”
said Lindsay Olesberg, 59, a Bible teacher. “But at the same time,
you also knew it was a buyer’s market in Austin, so the prices were
coming down.”
Taking homes off the market
In markets where buyers now have the upper hand, sellers who can
afford to wait are often opting to pull their listing rather than be
pressured into coming way down on price.
Tammy Tullis put her home in the Miami suburb of South Miami on the
market in June. But the four-bedroom, 3.5-bath house didn’t receive
many offers initially, so she dropped her $2.8 million asking price
by $100,000. That helped drive turnout during an open house, but she
only received low-ball offers.
“They were like $400,000-$500,000 off the mark,” said Tullis, 51.
Last month, the finance consultant took the listing down. She may
relist it sooner, rather than later.
“I want to sell, but I’m not in a rush-rush,” Tullis said.
Lower rates ahead?
The Trump administration has pushed the Federal Reserve to lower
interest rates, saying doing so will help the housing market. But
homebuyers – and politicians – should keep in mind that the central
bank only directly influences short-term rates, while most mortgages
are based on the yield of the 10-year Treasury. So, lower mortgage
rates wouldn’t be a given, even if the Fed cuts rates next week, as
the market expects.
And while lower mortgage rates would boost home shoppers’ purchasing
power, they also could bring in more buyers, giving sellers less
incentive to keep lowering prices.
Economists generally expect the average rate on a 30-year mortgage
to remain near the mid-6% range this year.
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