Finally, there may be some good news for people who want to buy a home. Even though the national median home price has started going up again, there are markets where the list prices are falling.
Austin, Phoenix and San Jose have seen home prices fall since the beginning of the year, but those markets were already among the most expensive in the nation. But now price declines are beginning to show up in cities whose median home price was already below the national average.
“Generally, there are two things that can drive an increase in price reductions,” said Realtor.com Chief Economist Danielle Hale. “One is if you have more homes on the market. Two is if there is a mismatch between what sellers are expecting and what buyers are willing and able to afford.”
In this case, it’s the latter. Inventory levels remain near historic lows but with mortgage rates now well above 7%, there is a limit to what buyers are willing and able to pay, especially in job markets where the prevailing salary is significantly below those in more expensive cities.
According to Realtor.com, 29 of the 150 largest metropolitan areas saw a year-over-year increase in the number of homes where the list price had gone down. Across the country, only about 15.5% of all homes listed on Realtor.com underwent a price cut that month. That was down from 19.1% the previous July.
Cities with the most price cuts in July
The data show cities with the most price declines tend to be in the South and Midwest, where the number of homes for sale has been growing along with prices. With a recent study showing remote workers would be willing to move in order to find an affordable home, these markets may be worth a look:
Fort Collins, Colo.
Cape Coral, Fla.
Fort Wayne, Ind.
Huntsville had, by far the largest median home price – $407,000 – so it also experienced the most price cuts. The number of price cuts increased by 69% over July 2022.
But even McAllen, Texas, with a median home price of $289,000, experienced a 50% increase in price cuts year-over-year.
Realtors say sellers who set a realistic price from the start usually don’t have to cut the price to sell. In Fort Wayne competition remains fierce for homes priced below $250,000, with these properties often receiving multiple offers.