Tri-Cities home sellers increasing price reductions

Tri-Cities home sellers are rebalancing their asking prices in the wake of slower sales, increasing inventory, consumer concerns about affordability and mortgage rates. While the overall region remains a seller’s market, inventory has increased enough in some prime price bands to label them with balanced market conditions.

May’s average price reduction was $17,962, up from $15,533 this time last year. It accounted for 62% of May’s homes sales.

While the trend is not as strong as what is being reported in some metro markets, it’s a clear sign sellers are becoming more flexible and willing to negotiate in response to the market rebalancing.

But while price reductions have increased, sellers were not making the same level of concessions that they were at this time last year. May’s average was $27,930 on 38.5% of the homes that sold. This time last year sellers settled for an average of $32,883 in concessions on 34% of sales.

Along with the increase in pending sales and new listings, May’s median price ($285,450) increased. It was 5.7% better than last year. The typical seasonal increase is 5%. The five-month price trend ($275,000) is up 7.6%.

Interest rates rate movements always move the market and although some policymakers are open to cutting the federal funds rate in July, economists see it as unlikely. The reason is they expect the initial effect of Trump’s tariffs on prices will tap the brakes on a rate reeducation.

CME FedWatch tool, a predictor of Fed policy rate decisions, is focused on September for potential rate reduction.

Meanwhile, the National Association of Realtors (NAR) outlook for mortgage rates is 6.4%. Chief economists Lawrence Yun says if inflation is under control mortgage rates can go down, but the nation’s huge debt will continue to keep rates high. He thinks it can go down to 6% with Federal Reserve cuts and calmer inflation.

Zillow expects rates to end the year in the mid-6% range barring unforeseen economic shocks.

Fannie May’s May Economic and Housing Outlook forecasts rates to end the year at 6.1%.

The Mortgage Bankers Association predicts the 30-year fixed rate to average 6.7% in the third quarter and end the year at 6.6%.