More landlords and sellers are cutting prices amid home-shopping season.

First, came the price cuts. Then rents cooled. As price cuts surge for for-sale homes, does it mean home prices are nearing a peak?

After five years of steep rent increases nationally, listing prices in the rental market are edging lower, and more often landlords are cutting advertised rents. Meanwhile, for-sale price increases remain strong, but sellers are still cutting prices to move homes off the market and doing so at an accelerating rate. This suggests that if price cuts are predictive, home prices soon could flatten. On the other hand, accelerating home prices could just be making it more difficult for sellers to price their home right from the get go.

Looking at the share of listings that go through at least one price-cut in both the rental and for-sale markets, here’s what we found:

In the rental market:

  • Nearly one in 10 rental listings had a rent cut: The share of rent cuts for rental listings nationally increased 1.2 percentage points from May 2016 through April 2017 to 9.7% from 8.6% the prior year (May 2015 to April 2016).
  • The pace of rent cuts is slowing: Just looking at listings from February through April 2017 (8.2%) and comparing that with the same 3-month period in 2016 (7.7%), the increase of 0.5 percentage points is not quite as dramatic as when looking at annual data, which could indicate that price-cut growth is stabilizing.
  • A majority of big rental markets saw cuts increase: Eighty-three of the top 100 metro areas saw the share of rental listings that had a price cut increase from last year to this year.

In the for-sale market:

  • More than one in 10 for-sale listings had a price cut: The share of for-sale listings with price cuts nationally increased 0.5 percentage points to 10.9% from 10.4% during the year ending April 2017 from 10.4%. This compares with a 0.5 percentage-point increase six months ago.
  • Price cuts rose sharply for for-sale homes: Annually, the share of for-sale listings steadily risen, but looking at the same data for the three months ending April 2017 compared with the same period last year, there is a 1 percentage point increase from 9.8% to 10.8%, indicating a quickening movement toward more price cuts.
  • Most major housing markets saw cuts increase: Sixty-nine of the 100 largest metros saw the share of for-sale listings with a price reduction increase from last year to this year.

First Came the Cuts, Then Rents Fell

Until March, the year-over-year monthly change in rent reductions in the rental market had been consistently pointing toward more and more cuts. Only recently has there been a break in that trend as rents are finally edging lower after five years of sharp increases in the post-recession expansion. The national median listed rent, at $1,650 a month, is now 2.9% lower compared with last year as opposed to six months ago when prices were still on the rise. The plateauing of rent growth and gradual return of price cuts in the rental market, are signs that rent cuts themselves may be leveling out could be pointing to the return of a more stable national rental market rather than one in which price appreciation was a given and landlords had little incentive to cut their initial listing price.

Growth of price cuts in the for-sale market has remained more volatile than in the rental market, but recently pointed strongly toward more price cuts even as the national median listing price, at $259,900, increased by 6.1% year-over-year in April 2017. As with rentals six months ago, this could be an indication that price growth may moderate in the coming months.

Texas Rental Market Experience Biggest Increases in Rent Cuts

Taking a closer look at metro-level data, Texas markets again dominated the list when it comes to the increase in the percentage of listings with rent reductions for rentals. Texas metros led our list in November. This time, Dallas led with a +6.5 percentage point change, followed by Austin (+4.8 percentage points), Houston at No. 3 (+4.2 percentage point), and Fort Worth at No. 13 with (+3.0 percentage point).

For the past couple of years, Dallas, Austin, and Houston have all permitted new multifamily units, which are often rentals, at rates well above their historical averages. While high demand has been keeping pace in these areas, this may be changing for some of these markets. Bay Area markets, San Francisco (+1.1 percentage points), No.44 and San Jose, Calif., (+1.0 percentage point), No. 48, and Denver, Col. (+2.3 percentage point), No. 24, have fallen from Nos. 3, 6, and 7, respectively, from six months ago, though they still remain the places with the highest share of listings that see a price reduction.

 

*an earlier version of this graphic incorrectly labeled the years in the columns. The data has been corrected.

% of Rental Listings with Largest Y-o-Y Increase in Rent Reduction
Rank U.S. Metro 2017 2016 Percentage Point Change, 2016 vs 2017
1 Dallas, TX 14.5% 7.9% 6.5
2 Austin, TX 16.6% 11.8% 4.8
3 Houston, TX 17.2% 13.0% 4.2
4 Portland, OR 17.0% 13.4% 3.6
5 Jacksonville, FL 12.5% 9.0% 3.5
6 West Palm Beach, FL 10.1% 6.6% 3.5
7 Oakland, CA 15.2% 11.9% 3.3
8 Tulsa, OK 12.6% 9.4% 3.3
9 Seattle, WA 17.1% 13.9% 3.2
10 Miami, FL 10.0% 6.8% 3.2
11 Honolulu, HI 14.5% 11.4% 3.1
12 Charlotte, NC 12.5% 9.5% 3.0
13 Fort Worth, TX 12.3% 9.3% 3.0
14 San Antonio, TX 11.1% 8.1% 3.0
15 Las Vegas, NV 11.3% 8.6% 2.7
16 Raleigh, NC 12.9% 10.3% 2.6
17 Fort Lauderdale, FL 9.1% 6.7% 2.4
18 Oklahoma City, OK 14.7% 12.3% 2.4
19 Greenville, SC 12.5% 10.2% 2.4
20 Cape Coral, FL 10.2% 7.9% 2.3
21 Nashville, TN 14.7% 12.4% 2.3
22 Los Angeles, CA 12.8% 10.6% 2.3
23 El Paso, TX 11.9% 9.6% 2.3
24 Denver, CO 18.5% 16.3% 2.3
25 San Diego, CA 13.6% 11.7% 1.9
Note: 2017 refers to the 12-month period between April 2017 and May 2016. 2016 refers to the 12-month period between April 2016 and May 2015. Download data for the 100 biggest metros here.

In For-Sale Market, Texas Again Tops List of Places with Biggest Price Cuts

Dallas again takes the No. 1 spot for the metro with the largest increase in proportion of for-sale listings with price reductions, followed by San Antonio, Texas, at No. 2. These places both saw a 3.0 percentage point increases. Price growth in Dallas (and San Antonio until recently) has been increasing at well above the national rate. This makes it a bit more difficult for sellers to accurately price their homes. Additionally, Texas is the largest nondisclosure state in the country. Having less information about how much other homes are selling for makes it more difficult to price your own home. San Francisco fell to No. 5 from No. 1 six months ago with a 2.8 percentage point increase in price reductions on for-sale properties over the last year, but the proportion of price reductions remains low overall with only 8.6%, which is the third lowest out of the top 100 metros. Last year, only 5.8% of listings in San Francisco saw a price reduction, which was the lowest out of the largest 100 metros.

The places that have the highest overall share of rental listings that experience a price cut skew heavily toward Bay Area metros such as San Jose, Calif. (21.2%), San Francisco (21.3%) and Oakland (15.2%), which are all in the top 10. On the other end are places like Boston, Fresno, Calif., and Long Island, N.Y., which all had fewer than 5% of rental listings go through at least one price cut and all saw fewer price cuts this year than last.

On the for-sale side, sellers in Camden, N.J., (18.8%), Chicago, (18.4%), and Phoenix (17.6%) saw the highest share of listings go through at least one price cut in the past year. In Madison, Wis. (7.6%), Honolulu (8.3%), and San Francisco (8.6%), the fewest sellers seem to be budging from their initial asking price.

*an earlier version of this graphic incorrectly labeled the years in the columns. The data has been corrected.

% of For-Sale Listings with Largest Year-over-Year Increase in Price Reduction
Rank US Metro 2017 2016 Percentage Point Change, 2016 vs 2017
1 Dallas, TX 14.1% 11.1% 3.0
2 San Antonio, TX 11.8% 8.9% 3.0
3 San Jose, CA 11.0% 8.1% 2.9
4 Camden, NJ 18.8% 15.9% 2.9
5 San Francisco, CA 8.6% 5.8% 2.8
6 Portland, OR 14.8% 12.2% 2.6
7 Austin, TX 13.5% 11.2% 2.3
8 Raleigh, NC 12.1% 9.9% 2.2
9 Oakland, CA 10.2% 8.1% 2.1
10 Fort Worth, TX 13.2% 11.3% 1.9
11 Birmingham, AL 10.6% 8.8% 1.9
12 Pittsburgh, PA 15.0% 13.3% 1.7
13 North Port-Sarasota-Bradenton, FL 14.1% 12.4% 1.7
14 Houston, TX 15.2% 13.6% 1.6
15 Tampa, FL 15.2% 13.6% 1.5
16 Charlotte, NC-SC 10.4% 8.9% 1.5
17 Chicago, IL 18.4% 16.9% 1.5
18 Nashville, TN 9.8% 8.3% 1.4
19 Tacoma, WA 13.8% 12.4% 1.4
20 West Palm Beach, FL 14.3% 13.0% 1.3
21 Tulsa, OK 13.5% 12.2% 1.3
22 Memphis, TN-MS-AR 11.4% 10.2% 1.3
23 St. Louis, MO-IL 14.9% 13.7% 1.2
24 Orange County, CA 15.9% 14.7% 1.2
25 Charleston, SC 12.1% 10.9% 1.1
Note: 2017 refers to the 12-month period between April 2017 and May 2016. 2016 refers to the 12-month period between April 2016 and May 2015. Download data for the 100 biggest metros here.

Methodology

This report was developed using Trulia’s For-Sale and Rental listing data. The report uses the entire price history of every listing found on Trulia’s website, for both rental and for-sale, dating back to May 1st of 2015 and up until April 30th of 2017. We calculated the total number of unique properties in each month and, the number of unique properties each month that saw at least one price reduction. This enabled us to calculate the percentage of listings that saw a price reduction. Metro areas found in this report are metropolitan divisions where available, but are otherwise metropolitan statistical areas.