Home Price Reductions Slip to 19% of Listings, Trulia Says

Reduced home pricesThe percentage of homes with a price reduction fell below 20 percent for the first time, according to Trulia’s nine-month-old measure of price discount activity.
But the trend may reverse as the deadline for the homebuyer tax credit looms.
Trulia, the real estate research site, said that 19 percent of listings on the market in the United States have at least one price cut as of March 1, 2010.
This represents a 10 percent decrease from the previous month. Trulia’s highest level of price discounts was recorded September through November, with 26 percent of home sellers offering reductions for each of the three months.
Trulia expects that price reductions will increase as the deadline approaches for the expanded first-time homebuyer tax credits.
In November, the tax credit for first-time homebuyers — worth up to $8,000 for those eligible —  was extended by five months until April 30, 2010. The credit can also be claimed if a binding contract before May 1, 2010 was signed to purchase the property before July 1, 2010.
The program was also expanded for long-time current homeowners who can qualify for up to a $6,500 tax credit if certain conditions are met.
“Consumer engagement on Trulia remains at an all time high, but home sales have dropped nationally during the past few months because there has been a lower sense of urgency to ‘buy now’,” said Pete Flint, Trulia co-founder and CEO. “As we get closer to the government incentives running out, we expect price reductions to increase as sellers begin to feel the pressure to lure buyers in, in advance of the tax credit expiration.”    
Price reduction levels peaked toward the end of 2009, linked to the original November 2009 deadline for the homebuyer tax credits. In the months following the extension of the tax credit, price reduction levels have since declined.

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