Home price reductions surged to their highest May level in nine years, as more sellers lowered asking prices in response to rising inventory and elevated mortgage rates.

Home Price Reductions Reach Nine-Year High

Price cuts on homes for sale surged in May, reaching the highest level for that month in at least nine years. According to new data released by Realtor.com, 19.1% of all active listings nationwide saw a price reduction last month. That figure represents the largest share of May price cuts since tracking began in 2016.

The rise in housing price reductions points to a broader softening in the real estate market. Sellers are increasingly lowering list prices to attract buyers facing affordability challenges. The combination of elevated mortgage rates and growing inventory has shifted some negotiating power back to buyers.

California Listings Face More Pressure

In California, the trend is even more pronounced. By the end of May, 37% of all active single-family home listings in the state included a price cut. This is the highest rate recorded for the month in at least five years, highlighting how rising supply and financing costs are weighing on the housing market.

April data showed California’s total active housing inventory grew at its fastest year-over-year pace since January 2023. Statewide inventory reached a 66-month high, continuing a 15-month streak of annual increases in housing supply. With more homes on the market, buyers have more choices—and less urgency.

For sellers, that means pricing competitively has become critical. In markets such as El Monte, South El Monte, and Baldwin Park, the pressure to adjust asking prices has become more common as buyers carefully compare available listings.

Interest Rates a Key Factor

High mortgage rates continue to limit what many buyers can afford. While some consumers remain active in the market, many are cautious or priced out entirely. The elevated cost of borrowing has reduced demand for higher-priced homes, prompting sellers to reconsider their pricing strategies.

Unless interest rates begin a steady downward trend, housing price reductions could persist into the summer. Experts warn that even a modest uptick in rates could lead to additional softening in list prices, especially in areas where inventory remains high.

Market Readjustment, Not Collapse

Real estate professionals say these changes do not point to a housing market crash but rather to a normalization. During the peak of the pandemic market, tight supply and historically low interest rates drove rapid price increases and bidding wars. Today’s environment, with higher rates and more listings, is encouraging a market correction toward more balanced conditions.

The recent trend in housing price reductions shows that sellers are adapting. In many communities, including the San Gabriel Valley, this shift could create better opportunities for buyers who were previously sidelined.

Buyers Respond to Home Price Reductions

As more price cuts appear in listings, prospective buyers in El Monte and nearby areas may find improved conditions for home shopping. While affordability remains a challenge, the combination of higher supply and price flexibility could make purchasing more feasible for some families.

Local housing counselors and real estate professionals recommend that buyers stay informed and act quickly when they see well-priced properties. With more homes on the market and fewer bidding wars, buyers have greater leverage than in recent years.

Outlook for the Months Ahead

The pace and scope of future housing price reductions will depend largely on mortgage rates and continued inventory growth. If rates remain high and supply continues to build, sellers may need to continue lowering prices to stay competitive.

For now, the May data confirms a clear trend: the housing market is adjusting, and price cuts are becoming a defining feature of the 2024 summer homebuying season.