As buyers shy away from a pricey market, more sellers are hoping concessions will help them move their house.
A new report from Redfin found that home sellers gave concessions to buyers in 42.9% of U.S. home sales during the three months ending April 30.
This is up from 25.5% at the same time last year but below February’s all-time high of 45.6%.
Concessions can include money toward repairs, closing costs, and mortgage-rate buydowns.
About one in five homes sold for less than the asking price along with a concession.
Redfin analysts say seasonality is the reason concessions dropped off, as more buyers typically enter the market in spring, giving sellers an edge.
But the high-rate, high-home price environment kept that number up, with the likelihood of a seller giving a concession dropping only 6% from February to April. That’s down significantly from the same drop in 2021 and 2022, 18%.
“High mortgage rates and low supply have thrown the housing market out of whack, and each deal is different,” said Boise, Idaho, Redfin agent Shauna Pendleton.
“The one consistency in the market right now is homebuilders handing out freebies. Most builders are offering concessions equal to about 3% of the sale price, which gets credited to buyers at closing, to offload properties. Buyers are using the extra cash to cover closing costs or buy down their mortgage rate.”
Sellers hope to keep homebuyers locked in as record numbers of Americans back out of deals.
As of January, the cancellation rate for both new and existing homes was around 20%. Soaring prices and interest rates keep prospective buyers shopping around from committing to a contract.
“Buyers are willing to walk away even if they can qualify because the house payments have gone up,” Al Bingham, a mortgage loan officer with Momentum Loans in Sandy, Utah, told CNBC. “They just cannot afford it.”
Many serious buyers feel like they have more options as fewer shoppers enter the market, giving them a reason to extend their search for a perfect home.
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