List Prices Reduced on One Home in Four

Nearly one in four homes currently for sale in the United States have undergone at least one price reduction as owners adjust their expectations to the realities of the current housing market.

The average price cut exceeded 10 percent nationwide, for a total reduction of $27.4 billion in housing value, according to figures released today by Trulia, Inc. The biggest price reductions were in the Detroit market, where markdowns averaged 23 percent, followed by Las Vegas with 16 percent and Miami with 15 percent.

Markdowns were spread relatively evenly across the market, with virtually no difference in the percentage of homes taking markdowns in either the above or below $2 million categories. The more expensive homes tended to take larger markdowns, however, with an average 14.3 percent reduction off the original price compared to 9.7 percent for the less expensive properties.

Housing prices have been pressured by a glut of foreclosed homes coming on to the market, which tend to sell for about 20 percent less than conventional properties. The National Association of Realtors recently reported that distressed properties, which also include short sales, made up 45 percent of all existing home sales in April.

Home sellers are also cutting prices in an effort to move homes that are remaining on the market an unusually long time. The NAR estimates there are nearly 4 million homes currently up for sale in the United States, representing more than a 10-month supply. Homeowners who have had their homes on the market for any length of time have also had the misfortune of seeing their home values drop right before their eyes: the NAR estimates that median home prices have dropped over 17 percent nationwide in the past year.

The low prices and attractive interest rates are generating interest from buyers, though economic uncertainty appears to be keeping many on the sidelines. Still, Trulia CEO Pete Flint expects that will change soon.

"Summer time is the peak season for buying and selling, and with some of the lowest prices in the last decade, we expect to it be a busy season," he said. "Everyone wants to think they are getting the best deal available and price reductions are helping to spark a renewed interest in the U.S. real estate market."