Redfin's record seller surplus lifts US home concessions to 44.7% of sales

A year earlier, 42.6% of US sales carried a concession ^[1]. A record imbalance between sellers and buyers has moved that figure by about two points in a year. The share of homes that took both a price cut and a concession moved by 0.2 points ^[4]. Buyers still shopping at mortgage rates near 7% face less competition and can negotiate better terms, according to Fortune's account of the Redfin report ^[3].

According to the report, sellers typically fund mortgage rate buy-downs or pay for repairs, and some add appliances or concessions of $10,000 to $20,000 ^[4]. A buy-down lowers the buyer's borrowing cost without lowering the contract price, so the sale price in the record stays put ^[4]. The median can therefore rise about 2% ^[6] while Redfin's chief economist, Daryl Fairweather, believes buyers are paying less. "This is more of a guesstimate," Fairweather said. "But I think if we were to quantify all these concessions...we would see that home prices are down, and people are getting better deals." ^[7]

Her guess can be checked against the counts. For net prices to be down while the median rose about 2%, the average concession across all sales must have grown by more than roughly 2% of the price in a year ^[2]. The newly added deals cannot supply that. If the concessions already on offer a year ago kept their size, each of the extra 2.1 points of sales would need a concession worth about 95% of the house, which is 2% divided by 2.1% ^[2]. So Fairweather's reading needs the existing concessions to have grown. The report, as Fortune describes it, includes a dollar range but not how the average concession changed over the year ^[4].

If concessions per deal did grow by a couple of points of price, Fairweather is right and buyers have won leverage over price, or rather over the net price, since the recorded one would still show a gain ^[2]. If they held roughly steady, net prices rose close to 2% ^[6] and the leverage is over terms: who pays for the rate buy-down, who pays for repairs ^[4]. A third reading is that a national average blends markets that barely resemble each other. In my view the evidence supports the second and third readings better than the first. A dollar-weighted series showing average concessions up by more than 2% of price would prove me wrong.

The split is wide. In Atlanta 72.8% of deals included a concession and in Charlotte 67.9%, against 5.7% in New York and 18.6% in San Francisco ^[8]. Fortune attributes the Sun Belt figures to a wave of post-pandemic construction ^[9] and the low New York and Bay Area shares to wealthier buyers who keep supply tight ^[11]. The free week in a seller's Airbnb and the all-expenses-paid cruise cited in the coverage came from Redfin's own agents in Atlanta and Charlotte ^[10].

Fairweather's longer-run case for buyers is about supply. Baby boomers account for about 42% of purchases and 52% of sales, according to Realtor.com data ^[13]. Boomers are "a large group of homeowners," Fairweather said. "They're going to be passing on their homes slowly but surely over the next decade or two, and that will add more inventory to the market." ^[14]