Homeowners Cut Prices as Buyers Remain Wary of Mortgage Rates

More than a fifth of U.S. homeowners cut their listing prices in January as high-mortgage rates held buyers at bay, according to new data.

Although borrowing costs remain a hurdle, house hunters haven’t had this much negotiating power with home owners in five years, home-listing company Zillow said Wednesday. More homes are hitting the market—the number of new listings rose nearly 12% year-over-year in January—while the number of pending sales dipped 3.6%, according to the company.

Many owners—nearly 23%—cut prices last month in an attempt to attract offers, according to Zillow Chief Economist Skylar Olsen.

“Buyers are still struggling with high monthly costs,” Olsen said in a press release. “Sellers are in a good position, and are willing to make price cuts to close a deal.”

House hunters have watched mortgage rates creep up from roughly 6.5% last January to 7.04% last month, Zillow said. Rates are approaching highs not seen in decades, with the average 30-year rate recently moving in a range around 7%.

Fed Chair Jerome Powell told lawmakers Tuesday that the central bank has less ability to bring down mortgage rates than it has to drive them up.

The Fed has maintained a relatively high Fed funds rate in an attempt to cool the economy and inflation. Powell and other officials have indicated that they don’t plan to reduce this rate anytime soon; mortgage rates are more closely tied to the 10-year Treasury yield, which generally tracks traders’ predictions about future Fed funds rates.