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Home prices in some major metro areas are falling, and falling fast, after more than two years of unparalleled growth.
According to the real estate listings site Realtor.com, median list prices for homes have fallen up to 10% from their June highs in many big cities — including some of the pandemic's hottest markets, like Austin and Phoenix.
It’s not just the usual summer-to-fall seasonal decline causing the housing market to cool. Increased mortgage rates are the main culprit behind the drop in prices. The average 30-year fixed-rate mortgage for the United States is now hovering around 7%, up from 3.2% in January, dramatically increasing monthly payments for buyers and sometimes disqualifying aspiring homeowners from being able to afford houses.
The Federal Reserve recently issued its fifth-straight interest rate hike as a measure to, hopefully, curb general inflation in part by cooling housing prices. Fewer people are able to afford to buy houses right now, and that means homes are sitting on the market longer, dispelling the bidding wars and offers way above list price that sellers have enjoyed the past two years. Some markets are seeing a rise in price cuts on homes as a result.
“Home shoppers in these areas are probably excited to see these prices come down,” Realtor.com Chief Economist Danielle Hale said in a news release.
But don't get too excited: Prices are still up 14% nationally over the past 12 months. “To put it into context, it’s still above where it was last year,” said Hale.
Where home prices are falling the most
For those who can qualify for mortgages right now, things are finally looking up, especially in competitive Sun Belt locations. Realtor.com analyzed monthly median home prices in the 100 largest U.S. cities to calculate the biggest decreases since June, when prices reached their height.
Austin, Texas, which has made headlines over the past few years for its exploding housing costs, saw the biggest overall drop (over 10%). Below are the 10 cities where home list prices decreased the most since the peak in June. All saw decreases above 7% during this time period, though prices for all 10 are still more expensive than they were a year ago.
- Austin, Texas
Median home list price in September: $558,275
Change since June: -10.3%
Change since September 2021: +2.2% - Phoenix, Arizona
Median home list price: $493,500
Change since June: -9.9%
Change since September 2021: +4.4% - Palm Bay, Florida
Median home list price: $379,995
Change since June: -8.9%
Change since September 2021: +5.8% - Charleston, South Carolina
Median home list price: $500,000
Change since June: -8.6%
Change since September 2021: +10% - Ogden, Utah
Median home list price: $532,500
Change since June: -8.6%
Change since September 2021: +7.7% - Denver, Colorado
Median home list price: $625,000
Change since June: -8.0%
Change since September 2021: +4.2% - Las Vegas, Nevada
Median home list price: $460,000
Change since June: -7.9%
Change since September 2021: +7% - Stockton, California
Median home list price: $581,725
Change since June: -7.7%
Change since September 2021: +7.3 - Durham, North Carolina
Median home list price: $460,000
Change since June: -7.5%
Change since September 2021: +2.2% - Spokane, Washington
Median home list price: $449,900
Change since June: -7.4%
Change since September 2021: +5.6%
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