Rising rates and waning buyer demand is finally weighing on home prices.
With the 30-year fixed-rate mortgage averaging at 7.12%, according to Mortgage News Daily, Zillow Z, -3.30%, Realtor.com, and John Burns Real Estate Consulting, all noted price drops in cities that were hot over the last two years.
Most of these cities were pandemic boomtowns, as remote work enabled many workers to find housing outside of big, expensive mega-cities.
Rick Palacios Jr., director of research and managing principal at John Burns Real Estate Consulting, said that “no housing market is immune to home-price declines” with mortgage rates above 7%.
“‘Many more regional housing markets will soon follow the downward pricing path that’s already playing out quickly along the West Coast.’”
“Many more regional housing markets will soon follow the downward pricing path that’s already playing out quickly along the West Coast, along with markets that rode the recent home-price appreciation wave hardest such as Austin, Boise, and Phoenix,” he added.
Here’s the top five markets that saw the biggest peak-to-current declines, based on the company’s September Burns Home Value Index. All of the markets had peaked either in March or April, Palacios Jr. noted.
- Los Angeles, declined by 11% from its peak
- San Francisco, declined by 11% from its peak
- San Diego, declined 9% from its peak
- San Jose, declined 8% from its peak
- Orange County, Calif., declined 7% from its peak
Home values in Austin, Boise, and Phoenix also declined by 6%, according to the Burns index.
Realtor.com and Zillow also saw similar declines, albeit over a different time period.
Realtor.com’s top five declining house markets
Realtor.com looked at monthly median home-list prices, and how they’ve fallen since the market peaked in June.
Between June and September the median home list price fell the most in:
- Austin, the median home list price fell by 10.3%
- Phoenix, by 9.9%
- Palm Bay, Fla., by 8.9%
- Charleston, S.C., by 8.6%
- Ogden, Utah, by 8.6%
(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)
Phoenix, a pandemic favorite, is seeing demand fall as rates rise.
(Photo: Getty Images)
Zillow’s top five declining house markets
Zillow looked at home home values changed from August to September, and found that prices dropped the most in these cities:
- Phoenix, by 2.3% from August
- Las Vegas, by 1.9%
- New Orleans, by 1%
- Riverside, Calif., by 0.9%
- Austin, by 0.9%
Prices are still up 8.4% year-over-year in Phoenix, Phoenix Realtors told MarketWatch. The median sales price was $450,000 in September.
The average number of days homes spent on the market rose from 29 days last September to 47 days.
But “we’re finally seeing the market normalizing,” Andrea Crouch, board president of Phoenix Realtors, said in a statement.
“Sellers are now having the opportunity to thoughtfully assess a more reasonable, and realistic, number of offers,” she added, “while buyers are being spared from having to make what were often on-the-spot, snap decisions with their realtors.”
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com