In this article, we will discuss the 25 cities where home prices are falling now. If you want to skip our discussion on the US housing market, you can go directly to the 5 Cities Where Home Prices Are Falling Now.
The US housing market is experiencing yet another turn as affordability is dampening demand for houses in the country. Data from the National Association of Realtors (NAR) showed that home affordability is currently at the lowest level since 1985. It also revealed that during Q3 2023, the median house price in the US rose by 2.2% as compared to the same period last year. This occurred after Q2 of 2022 witnessed a 2.4% decline in the median price of homes on a yearly basis. Overall, home prices rose in 82% of the housing markets tracked by NAR, with 11% of the markets experiencing double-digit increases in prices during Q3 2023.
Homeowners’ and buyers’ woes have further deepened as mortgage rates climbed to the highest level in the last 23 years. The 30-year mortgage rate ranged from 6.81% to 7.1% during the third quarter of 2023. The rise in mortgage rates has resulted from moves by The Federal Reserve to reduce soaring inflation rates. The monthly mortgage payment for an average single-family home with a 20% down payment increased by 19.2% during this period as compared to Q3 2022. About 27% of a typical family’s monthly income is spent on mortgage payments due to such a high rate. Therefore, with the current interest rate, a six-figure income is needed to afford mortgage payments in more than half the housing markets within the US.
The increase in housing prices has made the situation quite unfavorable for potential home buyers. However, home buyers don’t need to lose hope, as there are still a few metropolitan cities that actually experienced a decline in housing prices year-on-year (YoY) during the third quarter of 2023. The decline in prices does not indicate a real estate market crash in these cities but rather a period of slowdown. Most of these markets witnessed a boom during the pandemic and are now undergoing correction. This trend was witnessed in 38 housing markets throughout the US. Out of these, 25 have witnessed more than 1% decline in housing prices as compared to last year. Among the 10 cities where home prices are falling the most are Honolulu and Austin.
Some of the biggest real estate companies operating in the US market include AvalonBay Communities, Inc. (NYSE:AVB), Realty Income Corporation (NYSE:O), and Prologis, Inc. (NYSE:PLD). Here’s what Baron Funds said about Prologis, Inc. (NYSE:PLD) in its Q3 2023 investor letter:
“The shares of Prologis, Inc., the world’s largest industrial REIT, declined in the third quarter of 2023 along with most REITs. We are big fans of CEO Hamid Moghadam and Prologis’ management team, and we remain optimistic about the company’s long-term growth outlook.
25 Cities Where Home Prices are Falling Now
Mobile homes in a manufactured home park. Front yard.
Our Methodology
To compile our list of 25 cities where home prices are falling now, we consulted the latest quarterly report by the National Association of Realtors (NAR), a trade associate of real estate professionals within the US. We shortlisted the cities based on the YoY decline in median prices of single-family homes. The cities have been ranked in ascending order of the percentage change in median prices between the third quarter of 2023 and the same period during the previous year. With this context in mind, let’s begin our list of the 25 cities where home prices are falling in 2023.
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Cities Where Home Prices Are Falling Now
25. Houston, Texas
YoY Change in Median Home Price: -1.1%
The housing market in Houston, Texas, is currently undergoing a correction following the post-pandemic boom, which was characterized by historically low mortgage rates at 5%. In Q3 2023, single-family housing sales fell by 3.8% year-on-year in the city.
24. Dallas, Texas
YoY Change in Median Home Price: -1.1%
In the third quarter of 2023, there was a 6.31% decline in the sales volume of single-family homes in Dallas compared to the same period in 2022. Additionally, the days to sell a home increased from 53 to 71 days over the year. The combination of reduced sales and a growing housing inventory has led to a decrease in the prices of single-family homes in Dallas.
23. Salt Lake City, Utah
YoY Change in Median Home Price: -1.2%
The housing market of Salt Lake City has slowed down as it is also experiencing a period of price correction following the pandemic. Moreover, increasing mortgage rates have made houses unaffordable for many, leading to a drop in demand and, ultimately, a decline in housing prices.
22. Yakima, Washington
YoY Change in Median Home Price: -1.4%
With the mortgage rate rising to about 8% in October 2023, the affordability of housing has declined in Yakima. However, Yakima’s housing market remained very competitive, with homes selling within 15 days and at just about 1.4% below their listing price, on average, during Q3 2023.
21. Phoenix, Arizona
YoY Change in Median Home Price: -1.5%
Phoenix, Arizona, is another city where housing prices skyrocketed in the midst of the pandemic, only to experience a subsequent decline in 2023. In October 2023, home sales dropped by 7% compared to the previous month, while the days on the market increased to 54 in the city.
20. Pensacola, Florida
YoY Change in Median Home Price: -1.5%
The decline in the median price of single-family homes in Pensacola indicates a price correction, as the city’s housing market has experienced high price growth over the past couple of years.
19. Lakeland, Florida
YoY Change in Median Home Price: -1.5%
The housing market of Lakeland, Florida, is cooling down as mortgage rates remain high. The price of a typical home listing in Lakeland, Florida, is well below the national median.
18. Crestview, Florida
YoY Change in Median Home Price: -1.6%
Homes in Crestview, on average, were sold close to their listing prices in November 2023. Moreover, the average time to sell a home in November 2023 was 59 days, indicating an upward trend compared to the previous year.
17. Salem, Oregon
YoY Change in Median Home Price: -1.7%
Despite a cooling trend in the Salem housing market, it retains a degree of competitiveness. On average, home listings attract two offers and stay on the market for 52 days. It has shifted from being a hot seller’s market a year earlier to being a more balanced one.
16. Punta Gorda, Florida
YoY Change in Median Home Price: -1.8%
Punta Gorda is currently a buyer’s market, marked by a year-on-year decline in median housing prices. This trend is further highlighted by the fact that houses in this city are being sold, on average, at 4.42% below their asking prices.
15. Myrtle Beach, South Carolina
YoY Change in Median Home Price: -1.8%
Myrtle Beach currently represents another buyer's market, as homes are being sold at an average of 3.09% below the quoted price. Moreover, the average number of days a house remains on the market in Myrtle Beach held steady at 62 in November 2023. While this figure is slightly less than the previous year, it reflects an increase from the previous month.
14. Chico, California
YoY Change in Median Home Price: -1.8%
Sales volume of single-family homes in Chico fell by 14% YoY in October 2023. On average, homes in Chico are being sold at just 1% below their asking prices and stay on the market for 26 days.
13. Jacksonville, Florida
YoY Change in Median Home Price: -2%
Inflation, affordability concerns, and high mortgage rates have all contributed to the slowing down of the housing market in Jacksonville. Homes in the city are being sold at 1.67% lower than their listed prices. The city is at the thirteenth position on our list of 25 cities where home prices are falling now.
12. Macon, Georgia
YoY Change in Median Home Price: -2.4%
Macon is at the twelfth position on our list of 25 cities where home prices are falling now. The average selling price of homes in Macon is, on average, 2.17% lower than their initial purchase prices.
11. Kennewick, Washington
YoY Change in Median Home Price: -2.5%
While Kennewick's housing market maintains some activity, it is currently undergoing correction following the rapid growth observed a year earlier. There has been a slight increase in the median days on the market, reaching 58 days in November 2023.
10. Baton Rouge, Louisiana
YoY Change in Median Home Price: -2.9%
The Baton Rouge housing market has experienced a slowdown, resulting in a decline in prices. There was a significant 20.9% decrease in sales volume in the city during the third quarter of 2023 compared to the previous year.
9. San Antonio, Texas
YoY Change in Median Home Price: -3.1%
The San Antonio housing market is going through a period of correction after witnessing intense growth in the first half of 2023. With sales volume stabilizing and the market becoming more balanced, home prices have also decreased.
8. Logan, Utah
YoY Change in Median Home Price: -3.3%
While the market in Logan isn't facing a severe decline, the increase in housing inventory levels and a rise in the days on the market for homes could potentially exert further downward pressure on prices.
7. Provo, Utah
YoY Change in Median Home Price: -3.5%
Provo is currently characterized as a buyer's market for housing. The median days on the market saw a slight increase from the previous year, standing at 62 days in November. Meanwhile, the average sales-to-listing pricing was at 99.17%, suggesting that homes sold for a price close to what was initially listed.
6. St. George, Utah
YoY Change in Median Home Price: -3.6%
St. George is in sixth place on our list of 25 cities where home prices are falling now. The market is not very competitive, with multiple offers per listing being rare. This trend is attributed to the combination of increasing interest rates and declining affordability in the area.
Companies like AvalonBay Communities, Inc. (NYSE:AVB), Realty Income Corporation (NYSE:O), and Prologis, Inc. (NYSE:PLD) are playing an important role in shaping the US real estate landscape.
