Over 40 Percent of Homes See Prices Drop in Multiple Local Housing Markets

A 'for sale' sign hangs in front of a home in Miami, Fla., on June 21, 2022. Joe Raedle/Getty Images

With home sellers realizing that buyers are no longer able to afford houses at current prices and mortgage rates, they are adjusting expectations and prices are dropping in multiple housing markets across the United States, according to real estate brokerage Redfin.

In Provo, Utah, 47.8 percent of homes for sale saw prices go down in May, the highest among 108 metropolitan divisions analyzed by Redfin, the firm announced in a June 21 news release.

Tacoma, Washington, saw 47.7 percent of homes reduce prices; Denver saw 46.9 percent; Salt Lake City saw 45.8 percent; Sacramento, California, saw 44.3 percent; Boise, Idaho, saw 44.2 percent; Ogden, Utah, saw 42.6 percent; Portland, Oregon, saw 42 percent; Indianapolis saw 41.9 percent; and Philadelphia saw 41.2 percent.

In total, over 10 percent of home sellers dropped their prices in all 108 metropolitan areas. In 53 of those areas, more than 25 percent of home sellers cut their prices.

In a video uploaded to Twitter on June 28, Redfin Chief Economist Daryl Fairweather blamed high home prices and rising mortgage rates for creating affordability challenges. Mortgage payments on a typical home are up 42 percent compared to 2021, she said, predicting a cooling down of the housing market.

Fairweather points out that there are two kinds of sellers in the market today. The first group already knows that the market has cooled while the second group is learning about the market changes as they go through the selling process.

“The former wants to sell quickly before the market slows further and they’re willing to price slightly below comparable homes in their neighborhood right away, and the latter may have to drop their price if their home doesn’t attract buyers within a few weeks. As more sellers come to terms with the slowing market, fewer homes will have price drops,” Fairweather said in the Redfin news release.

Affordability Crisis

American homebuilders have grown more pessimistic about the state of the housing market during the past six months, with the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) declining in June.

“In a troubling sign for the housing market and broader #economy, home builder confidence posted its sixth straight monthly decline in June, falling two points to 67, in the NAHB/Wells Fargo Housing Market Index, the lowest HMI reading since June 2020,” NAHB said in a June 15 tweet.

According to data from the NAHB Housing Affordability Index, the median price of existing single-family homes rose from $346,200 in April 2021 to $397,600 in April 2022. The qualifying annual income needed to be approved for a mortgage jumped from $56,832 to $82,416 during this period.

Mortgage rates rose from 3.11 percent to 5.05 percent, monthly payments on mortgages increased from $1,184 to $1,717, and the share of payment as a percentage of income went up from 16.2 percent to 22.9 percent.