Nearly a quarter of all home listings saw a price cut in January, yet another indicator that sellers are growing more motivated to sell and the so-called ‘lock-in’ effect caused by high mortgage rates is starting to ease, according to Zillow.

About 23% of sellers cut the price of their listing last month, the largest portion for any January since 2018, the company reported.

Price cuts were the most common in Phoenix at 33.5% of listings, followed by Tampa (32%), Jacksonville (31%), Orlando (29%), Florida; and Dallas (29%).

“Though competition varies greatly by region, most buyers in the market today have a good chance of seeing a price cut on their saved listing,” Zillow’s Chief Economist Skylar Olsen wrote in the January market report.

The impact of the large numbers of homeowners with low-rate mortgages appears to be “losing its grip” on home sellers, Olsen said.  New listings rose 11.5% year over year in January, Zillow data suggests.

“Homeowners find themselves in a solid financial position and ready to move on — even if it means taking a price cut on their listing,” she wrote.  She also said economic factors have made sellers more inclined to list. 

“Home equity is near record highs and the general economy and financial markets are surprisingly strong,” she wrote.

High rates hovering around 7% are stinging buyers, however. She noted pending sales fell 3.6% year over year in January, and the high rates have caused affordability challenges for buyers.

Nationally, homes that sell are typically under contract in 38 days, Olsen wrote. That is nine days slower than last year but nearly 10 days faster than pre-pandemic norms.

But “regional variation in competition is massive,” she said.

“Homes are selling in two weeks or less in expensive coastal metros like San Jose, Boston, Seattle and Washington, D.C., and far more slowly in the South,” Olsen wrote.