2010-08-11 06:55:40
By Lynn Adler Lynn Adler Wed Aug 11, 12:18 am ET
NEW YORK (Reuters) Owners cut prices on one-quarter of U.S. homes listed for
sale in July, a fourth straight monthly rise, as job market fallout trumped
record low mortgage rates, real estate website Trulia.com said on Wednesday.
Sellers in the 50 largest cities slashed $30.1 billion from prices on houses on
the market as of August 1, up from $27.3 billion in the prior month, San
Francisco-based Trulia said in a report provided to Reuters before official
release.
Unemployment near 10 percent, wage cuts, restrictive lending practices and home
values that have fallen below their mortgage balances have left many potential
buyers unable to take advantage of low rates.
"With one out of every four homes experiencing at least one price reduction,
sellers are feeling no relief this summer in a market climate of fewer
qualified buyers and widespread uncertainty about the job market," said Pete
Flint, Trulia chief executive.
The average discount on homes reduced at least once held at 10 percent from the
original asking price in July from June.
"If buyers are unqualified to buy, it doesn't matter how low interest rates are
or how discounted a home is," Flint said in a statement, adding that the
housing market will bounce around the bottom for months.
Unemployment remained at 9.5 percent in July but would have been higher if
discouraged Americans had not dropped out of the workforce.
The housing market is still gaining equilibrium in the aftermath of up to
$8,000 in buyer tax credits that ended on April 30. The credit forced sales
into spring months at the expense of summer activity.
During the spring sales rush, sellers cut prices by much smaller amounts
totaling $22.8 billion in March and $25 billion in April, according to Trulia.
U.S. 30-year mortgage rates averaged 4.56 percent in July, according to home
funding company Freddie Mac, and have since drifted to a record low under 4.50
percent.
Nonetheless, in half of the 50 largest cities, sellers last month lowered
prices on at least 30 percent of the homes for sale. Foreclosures continue to
weigh on prices.
The real estate market will keep languishing until the job market recovers,
said Trulia's Tara Nelson.
"Sellers need to continue to be very aggressive with pricing to compete against
all the low-priced short sales and foreclosures that they'll be on the market
with, for a long time to come," she said.
Minneapolis led in price cuts for a fourth straight month, with 42 percent of
listings lowered at least once. The average discount was 9 percent for a total
of $33.8 million in reductions, Trulia said, citing rising inventory and
mounting competition.
Las Vegas had the biggest spike in the share of sellers cutting prices at 18
percent, a 56 percent surge, while New Yorkers cut prices on 20 percent of the
listings, a 15 percent jump in the month.
Cities in California were among those with the largest increases in the share
of sellers slicing prices.
Price-cutting on luxury homes listed at $2 million or more had an average
discount of 14 percent from the original listing price, Trulia said. Homes in
this category account for less than 2 percent of total inventory, but almost
one-quarter of the total dollars slashed from asking prices.
(Editing by Dan Grebler)