The US housing market is experiencing a notable cooling trend as summer ends and fall approaches, with home sellers reducing prices to attract buyers amid high mortgage rates and affordability challenges. According to an analysis by Realtor.com, the price per square foot for homes decreased year over year for the 10th consecutive month in August, with nationwide prices down 1.8% compared to the previous year [1]. Median list prices fell year over year in three of the four major US regions: the Northeast (-3.6%), the South (-2.6%), and the West (-2.1%), while the Midwest remained flat [1].
The report highlights that 36 out of the top 50 metro areas saw a decline in median list price per square foot in August. The largest decreases were observed in Austin (-8.1%), Tampa (-5.6%), and Memphis (-4.1%). Conversely, Providence, R.I., Indianapolis, and Chicago saw gains of 9.3%, 4.4%, and 3.6%, respectively [1]. Realtor.com senior economist Jake Krimmel noted that many of the markets with the largest declines, such as Austin, Tampa, San Antonio, and Denver, were 'boomtowns' during 2020-22 and are now giving back some of their pandemic-era gains. These areas also generally have more inventory now than before the pandemic [1].
San Francisco stands out as an exception, with a 3.9% decline in list price per square foot in August, ranking fourth nationally, despite the market remaining highly competitive. The number of active listings in San Francisco dropped 16.3% in July from the prior year, compressing the market. The median listing price in the city remains high at $908,700, though it has decreased by 5.2% year over year [1]. Krimmel explained that the decline is not due to homes losing value, but rather a shift in the type of inventory available, with fewer small, pricey homes in the city center and more large, less expensive per-square-foot homes in the suburbs [1].
Other metro areas with significant annual declines in listing price per square foot include San Antonio (-3.6%), Denver (-3.4%), Baltimore (-3.2%), San Diego (-2.7%), Orlando (-2.6%), and Portland, Oregon (-2.4%) [1].
CONCLUSION
The US housing market is seeing widespread price declines, particularly in cities that experienced rapid growth during the pandemic. While some regions and cities are still seeing price gains, the overall trend points to a cooling market as sellers adjust to affordability challenges and increased inventory. Market participants should monitor these shifts as they may impact both buyers and sellers in the coming months.