T
he housing market is experiencing a significant shift in power dynamics, with sellers dropping their listing prices in an effort to offload their properties. According to a recent report by Realtor.com, sellers are becoming more desperate to sell their homes, leading to an increase in price cuts. In August, 19.3 percent of listings had sellers drop their prices, which is the highest level in five years and August total since 2018.

    The growing number of homes on the market and rising share of price cuts indicate that the housing market is no longer heavily tilted in favor of sellers. This is partly due to an improvement in listing inventory, which has seen a 36.2 percent year-over-year increase in August, marking the 10th consecutive month with an inventory bump. With more homes for sale, there is less competition among buyers, which in turn gives sellers less pricing power.

    The inventory improvement was seen across all four regions tracked in the report, with the South experiencing the biggest bump in active home listings, which increased by 46 percent. Tampa saw an impressive 91.1 percent increase in active listings, making it the city with the biggest increase in active listings.

    However, there was a dip in newly listed homes, which decreased by less than 1 percent compared to last year. This marks an end to a nine-month streak of increased new home listings on an annual basis. Realtor.com chief economist Danielle Hale attributed this dip to volatile mortgage rates.

    While the housing market may not be expected to crash anytime soon, rising inventory in some of the nation's hottest markets could signal trouble. Buyers also stand to benefit from declining mortgage rates, which could drop even further if the Federal Reserve delivers on interest rates it has teased ahead of its meeting slated for this month. In August, mortgage rates averaged 6.35 percent, which is the lowest in 18 months. Despite this, the median home price in August fell almost $10,000 to $429,995, according to Realtor.com's report. However, the median price per square foot actually increased 2.3 percent year-over-year as smaller homes took a larger share of listing inventory.