Why More Homeowners Are Selling at a Loss in 2025

Austin Leads Nation in Seller Losses as Market Corrects

In 2025, a growing number of U.S. home sellers are facing an uncomfortable reality: they may have to sell at a loss. According to a recent Redfin report, 5.7% of homes currently listed for sale nationwide are at risk of being sold for less than their purchase price. While that figure is still below historical highs, it has increased from 4.4% just one year ago. The trend is particularly severe in certain markets, especially in the Sun Belt, where pandemic-era buying booms pushed home prices to unsustainable levels.

Austin, Texas has emerged as one of the most affected metros. Nearly half—47.5%—of homes purchased in Austin after July 2022 that are currently on the market are at risk of selling for less than the buyer paid. That figure is the highest in the nation among major metropolitan areas, closely followed by Tampa (35.8%) and Orlando (31.5%). For single-family homes in Austin, the risk level is also concerning, with 13.2% of listings priced below their likely resale value. Adding to this pressure, the median sold price in Austin has declined from $550,000 in May 2022 to $450,000 by July 2025—an 18.18% drop, or $100,000 loss from peak pricing.

One example of this shift can be seen in a recently listed condo in Downtown Austin. Purchased in March 2024 with an estimated purchase price of roughly $553,000 based on a $415,000 mortgage and 25% down payment, the investor initially attempted to lease the unit—twice—but was unsuccessful. The property was then listed for sale at $745,000 but has since been reduced to $599,000 as of July 14, 2025. Public remarks on the listing note that the current asking price is $595,000 less than the lowest-priced equivalent floor plan offered by the developer. The seller has implemented a structured 10-day showing window, but the property remains active on the market after the offer deadline.

This example mirrors broader national trends reported by the Wall Street Journal, where buyers who took on 6.5% to 7.5% mortgage rates over the past two years expected to refinance once rates fell. However, rates have remained above 6.6%, leaving many homeowners locked into higher payments with little relief. In one case, a couple in Ponte Vedra Beach, Florida purchased a townhouse with a 7.6% interest rate and planned to refinance within a year. With rates still high and rising insurance costs, they decided to list and cut the price after realizing the plan was no longer financially viable.

The divide in seller vulnerability is clearly tied to purchase timing. Nationally, Redfin found that 16.4% of sellers who purchased their home after July 2022 are now at risk of selling at a loss, compared to just 9.0% of those who bought during the pandemic and 1.8% of those who purchased before July 2020. Condos are especially susceptible, with 28.7% of post-pandemic condo listings nationwide potentially priced below their original purchase.

At the same time, data from homebuilders is revealing a competitive imbalance in the market. According to recent reports, approximately 40% of homebuilders are currently cutting prices on new builds, with the average reduction around 5%. Moreover, more than 60% of builders are offering incentives—such as mortgage rate buydowns that offer buyers rates 2.5% below conventional loans—to help move inventory. These aggressive builder tactics are directly impacting the resale market. Sellers of existing homes are now competing with builders offering lower prices, newer homes, and far more attractive financing packages.

While sellers in some cities are already feeling the impact, the overall risk remains historically low—at least for now. During the aftermath of the 2008 housing crisis, about half of all sellers were underwater. However, if home prices were to fall further, these numbers could escalate. Redfin projects that even a 1% drop in prices could raise the share of at-risk listings from 5.7% to 6.4%, and a 5% drop could push that figure to 10.1%.

The implications are clear. Homeowners who bought at or near market peaks and hoped for refinancing opportunities are now caught between rising costs and stagnant rates. In markets like Austin, the challenges are compounded by a softening rental market, sluggish demand, and increased inventory. While sellers who purchased prior to the pandemic generally retain substantial equity, recent buyers may be facing difficult decisions about whether to hold, lease, or sell at a loss.

As the housing market continues to correct, buyers are encouraged to pay closer attention to actual transaction values rather than list prices. In many cases, the listing price is more aspirational than realistic. With over half the country experiencing price declines, the next 6 to 12 months could reveal how deep this correction will go—and how many more sellers will be willing to accept losses to exit the market.

FAQ: Seller Losses and Housing Market Trends in 2025

Why are so many homeowners selling at a loss in 2025?

Homeowners who purchased after the pandemic peak in 2022 often paid elevated prices during a surge of demand and low mortgage rates. As rates have since risen and prices softened in many markets, some sellers now find that their home’s resale value is lower than their original purchase price.

Which U.S. cities have the most sellers at risk of losing money?

According to Redfin, Austin, TX tops the list, with nearly half of post-pandemic home listings at risk of a loss. Other high-risk cities include Tampa, FL; Orlando, FL; and San Antonio, TX. These Sun Belt markets saw some of the steepest post-pandemic appreciation and now face more substantial corrections.

Are condos more likely to sell at a loss than single-family homes?

Yes. Nationally, nearly 10% of condos are at risk of selling at a loss, compared to 4.4% for single-family homes. For condos purchased after July 2022, that risk jumps to 28.7%, making them the most vulnerable property type.

How does the timing of a home purchase affect loss risk?

Redfin data shows that only 1.8% of pre-pandemic buyers are at risk of selling at a loss, compared to 16.4% for post-pandemic buyers. This reflects the importance of long-term equity buildup and the risks associated with buying at market peaks.

How are builder incentives affecting the resale market?

Builders are aggressively cutting prices and offering incentives such as mortgage buydowns, making new homes more attractive to buyers. This has created stiff competition for resale sellers, especially those who bought at higher prices and cannot match the incentives offered by builders.​