Home Prices Decline in 11 Major US Metro Areas as Market Shifts

The housing market is undergoing a notable transformation as home prices in 11 of the 50 largest U.S. metro areas have started to decrease. This downward trend is expected to precede a more widespread decline later this year, signaling a pivotal change in market conditions. The deceleration in year-over-year national home price growth, which has slowed to 2.5%, underscores this shift. This reduction from the previous 2.9% growth rate indicates that the market is adapting to new economic factors and buyer behaviors.

The return of first-time homebuyers is a significant development, with 34% of existing-home sales in April being made by first-timers. This is the highest percentage recorded since July 2020, suggesting that more new buyers are finding ways to enter the market. However, the market remains challenging for buyers. The median price for existing homes rose to $414,000 in April, a 1.8% increase over the previous year, although this growth rate is slower than in recent years. Inventory has increased by nearly 21% year-over-year, providing more options for buyers and potential for negotiation. According to the National Association of REALTORS® Chief Economist Lawrence Yun, a drop in mortgage rates could quickly unleash pent-up demand from buyers who have been waiting for relief.

Despite the challenges, competition remains intense, with 60% of homes selling in under a month and 18% selling for more than the asking price. Homes received an average of 2.4 offers, and 25% of buyers paid with all cash, while 20% waived inspections or appraisals to stay competitive. This data indicates that serious buyers are acting swiftly and strategically, and first-time buyers need to be prepared to make an offer.

Regionally, the Northeast saw the highest median price increase of 6.3% year-over-year, while the West experienced a slight decline of 0.2%. The Midwest and South showed moderate increases of 3.6% and a slight decrease of 0.1%, respectively. These regional variations highlight the diverse nature of the housing market across the country.

For first-time homebuyers, the current market presents a mix of opportunity and challenge. While prices remain high and competition is fierce, rising inventory and shifting market dynamics are creating windows of possibility. Buyers who are prepared with savings, secured financing, and a trusted real estate advisor may find this an opportune time to enter the market. Preparation and timing will be crucial in navigating today’s housing landscape.