The latest report by Redfin shows that the share of US homes experiencing price declines has reached its highest level since 2022, with more than 6% of homes seeing decreases. This could be an indicator that national price growth might soon slow down.
In terms of metro areas leading this trend, three are located in Texas, and the other is in Oregon. In Austin, home prices dropped the most by 2.9% annually, followed by San Antonio and Fort Worth at 1.2%, and Portland, Oregon at 0.9%. This is the first time since January that prices have declined in multiple cities, signaling a potential softening in broader price growth.
The increase in housing prices is happening alongside a decrease in demand as active listings are spending more time on the market. Part of this decline in demand is attributed to high housing costs pricing out potential buyers, especially in Austin where record prices have led to falling prices.
The pandemic-induced construction boom in Texas and Florida aimed at accommodating remote workers seeking affordability is now seeing a shift as some are moving to more competitive metros. Nationwide, the supply of housing remains limited, with only about 3 months worth available compared to the balanced level of 4 to 5 months. Despite this high demand and limited supply, potential homebuyers are facing challenges due to high mortgage rates, with the 30-year fixed rate remaining above 7%. Expectations of a drop to the 6% range by 2024 are now unlikely, indicating that rates might remain high throughout the year.
