The Federal Reserve has raised interest rates by 1.5 percent since June in a bid to cool inflation, hikes that are contributing to a cooling housing market and higher monthly mortgage payments.
At the same time, home prices in Austin are hardly cheap, even by recent standards. The median list price noted by Realtor.com is still up more than 2 percent from September 2021.
“Home shoppers in these areas are probably excited to see these prices come down. But to put it into context, it’s still above where it was last year,” Realtor.com Chief Economist Danielle Hale said in the analysis.
Coming in second on Realtor.com’s list is Phoenix, where the median price has dipped by 9.9 percent since June. The median home price in the Arizona capital is $493,500.
Soaring mortgage rates reached a 16-year high last week, contributing to falling demand in what had been some of the pandemic-era’s hottest markets, such as Austin. Prices across the country remain up 14 percent from the same time last year, according to the real estate company.
Hale noted that home prices “cool off as we move from the heat of the summer into the fall. But this reflects more than seasonal cooling in prices.”
For the analysis, Realtor.com looked at the monthly median home list prices in the 100 largest U.S metropolitan areas, then calculated the price change since the market peaked in June. The site only included the metro areas with the largest drop in any state.
Another pandemic-era hotspot, Palm Bay, Fla., finished third on the list of cities where prices are dropping the most.
The city, which sits between Daytona and West Palm Beach, is cheaper than both of its neighbors, according to the analysis. Median list prices in Palm Bay have fallen by 8.9 percent since June, to $379,995.
Charleston, S.C., and Ogden, Utah, where home prices have fallen by 8.6 percent, round out Realtor.com’s top five.
Prices are expected to continue to cool, and experts predict mortgage rates will rise further nationwide as the Federal Reserve continues to raise interest rates to fight inflation.
Fed Chairman Jerome Powell said last month the U.S. housing market will likely “have to go through a correction” to make home more affordable.
Here are the 10 U.S. cities experiencing the biggest price drops.
- Austin -10.3
- Phoenix -9.9
- Palm Bay, Fla. -8.9
- Charleston, S.C. -8.6
- Ogden, Utah -8.6
- Denver -8.0
- Las Vegas -7.9
- Stockton, Calif. -7.7
- Durham, N.C. -7.5
- Spokane, Wash. -7.4