The percentage of U.S. homeowners who cut the listing price on their houses fell in February to the lowest level in 10 months, as initial pricing became more realistic heading into the spring selling season, real estate web site Trulia.com said on Tuesday.
Prices on 19 percent of homes on the market as of March 1 had been cut at least once, the lowest percentage since San Francisco-based Trulia started tracking reductions in April 2009. At the peak in October and November, 26 percent of sellers had cut their asking price.
More homes will come on the market as the weather warms.
Buyers and sellers are finally coming together and sellers are pricing the homes properly from the start, said Ken Shuman, head of communications at Trulia.
The shift comes after home prices toppled by an average of 30 percent from peak to trough before starting to stabilize and as loan delinquencies and foreclosures raced to record highs.
In January, unusually harsh winter weather in much of the country squelched home sales. Existing home sales fell more than 7 percent to the weakest level since June and new homes sales set a record low.
We've seen enough fluctuation in the market that agents understand pricing properly and sellers are actually beginning to listen to the advice they are getting, Shuman said.
Better pricing is leading to less time on the market, less price reduction and in a lot of markets we're starting to see bidding wars on lower end properties, he added.
Housing demand, however, faces another hurdle entering the spring, when a federal incentive program ends.
Home shoppers who are eligible for an $8,000 first-time buyer tax credit, or repeat buyers who qualify for a $6,500 credit, must sign contracts by April 30 and close loans by the end of June.
Did we pull all of our qualified buyers forward, and what's the demand going to be like overall whether there is a credit or not come the big selling season? Shuman said. That's the biggest challenge coming off of the tax credit.
In the meantime, the price reductions among the top 50 national cities seen over the past month point to stabilization in some of the hardest-hit areas.
Six major California cities had the lowest share of home price cuts in February, Trulia found. Prices were lowered on 16 percent of the listings in San Francisco, 15 percent in Sacramento, 13 percent in San Diego and in Oakland, and 12 percent in San Jose and Fresno.
The four cities leading the pack of price cutters, in contrast, were Milwaukee, Wisconsin (33 percent of sellers cut prices), Phoenix and Mesa, Arizona (each with 31 percent), and Memphis, Tennessee (also 31 percent).
Sellers in the these cities need to look at the newest comparables on the market and price aggressively from the start to help catch the attention of buyers and avoid future reductions, said Shuman.
(Editing by Leslie Adler)