If you’re in the market for a home, you’ve probably noticed an increase in price cuts. Price cuts can spark a range of buyer reactions, from interest and urgency to skepticism. What do price cuts really mean and what do they signal in the overall housing market?
A price cut happens when a seller lowers their listing price.
These cuts typically occur after a home has been on the market for a while.
Price cuts happen for a variety of reasons:
Slower buyer activity
A shift in local market conditions
A price correction.
While they are a normal part of any housing cycle, an increase in price cuts across the board can signal that sellers are adjusting to a more cautious housing environment.
“The housing market has always been a function of supply and demand,” says NewHomeSource chief economist Ali Wolf. “Today, demand is softer than it has been in recent years, and supply is higher. This means sellers can no longer list their price at aspirational levels and expect demand to be off the charts.”
To provide context for price cut activity, the NewHomeSource team tracked the share of active listings that had a price cut each month from 2017 through the first half of 2025. The analysis indicates more homes are cutting prices in 2025 than are typical for this time of year.
In June 2025, 38.5% of active listings had reduced their prices.
In 2020 and 2019, 25.4% and 31.2% of listings cut prices, respectively.
2022 is the only year since 2017 with a higher June reading for price cuts (42.8%).
However, 2022 stands out due to significant economic uncertainty and rising interest rates. Interest rates began rising in March 2022 and the 75-basis point increase in June 2022 was the largest single increase since 1994. This made borrowing more expensive, cooling demand, and forcing many sellers to make price adjustments.
Typically, price cuts ramp up in the late summer or early fall, following the spring selling season as sellers get more motivated to move their homes before the end of the year. However, in 2024 and 2025, the share of listings with price cuts began rising as early as February. By March of 2025 and April of 2024, more than one-third of all active listings had already cut their prices.
Key takeaway: This shift likely reflects buyer hesitation rather than sellers overpricing initial listings. With higher mortgage rates, tighter budgets, and more economic uncertainty, buyers have become more cautious. This puts sellers in a position where they may need to adjust their pricing to remain competitive in the market.
What It Means: As a buyer, more price cuts open the door for more negotiating power – especially in markets where inventory is building. However, it’s important to remember that not every price cut means a great deal. The new-home market can be influenced by the resale market. When listings on the existing-home market begin to reduce prices, home builders often feel pressure to respond with incentives or more competitive pricing of their own.
The bottom line: Price cuts are a sign that the market is shifting, but they are also a normal part of a more balanced housing landscape. After the fast-paced, competitive years the market has experienced, the return of negotiation is not necessarily a bad thing. Buyers and sellers in the current market are now on more even footing. As a result, now may be the right time to take the plunge for today’s home shoppers.
