Fewer homes are selling above list price

The amount of homes that were sold above their listing price fell each month in the second half of 2018, with December seeing the biggest month-over-month drop since at least 2012, Zillow reported. Experts interpret it as another sign of a slowdown in the housing market.

Just 19 percent of home sales in the U.S. went for above asking price in December, down from 21 percent in November and a peak of 24 percent in May. While lower than the highs of this spring, the level remains above the 17-percent range from 2014.

This downward trend in December was widespread: Eight of the 10 largest markets in the U.S. experienced a drop from November levels – Philadelphia and Washington, D.C., were the exceptions. Among the largest 35 markets, 27 saw a downtick in the share of homes that sold above list. The largest drop was in Indianapolis, where homes selling above list fell nearly 13 percentage points, followed by San Francisco, down 5.4 percentage points. Notably, San Francisco still saw the second-highest share of homes sell above list price in December (42.6 percent) among top-35 markets, exceeded only by San Antonio (44.3 percent).

Despite the slowdown during the back half of the year, the annual share of homes sold above list price still trended upward for the fourth consecutive year, though the pace is slowing. Nationally, 23.5 percent of homes sold above list price in 2018 compared to 22.7 percent in 2017. The median amount above asking that sellers realized fell from $7,000 to $6,830.

"Last year marked an inflection point in the housing market. The first half of 2018 looked a lot like the previous three years with sellers firmly in control of the market and buyers outbidding each other for scarce inventory, pushing up prices," said Zillow® senior economist Aaron Terrazas. "But something shifted mid-summer. Sellers sitting on the sidelines joined in, increasing inventory. The balance of power began to swing marginally back toward buyers – particularly in higher-priced communities – during the second half of the year, an unfamiliar chill after several years of frenzied activity. With mortgage rates now back down, early data from the first month of 2019 suggest that it is still premature to call it a buyer's market. But more than any time in recent memory, it is important for sellers to be thoughtful in their listing strategy. Buyers are out there, but they're no longer fighting each other tooth and nail to get in the door."

The San Francisco Bay Area and Silicon Valley remained the hottest housing region in the country in 2018. Among top-35 markets, San Jose, Calif., (64.1 percent) and San Francisco (61.6 percent) had the highest share of home sales above asking price despite a steady slowdown since the start of last year. These two markets combine to fill the top-10 lists for share of homes sold above asking and median price above asking since Zillow began tracking this data in 2012. This includes a record $101,000 median price above asking in San Jose in 2018, shattering the previous record of $70,000 set in San Jose in 2017.

Miami (9.7 percent of homes sold above asking), Tampa Bay (14.5 percent) and Pittsburgh (15.2 percent) were 2018's coolest top-35 markets. Nearly 84 percent of homes in Miami sold for below their asking price last year, which was the highest share among top-35 markets since 2014.