15 Housing Markets Where Home Prices Are Falling

After two years of unprecedented home price growth, it seems the housing market has reached a tipping point. Pricing pressures from rising interest rates, on top of already expensive housing, are leading to less affordability for buyers. So interest and price growth are waning. While not every housing market is dropping, here are 15 where the prices are certainly falling.

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According to Redfin (NASDAQ:RDFN), Seattle is seeing the greatest and fastest deceleration in home price growth month over month. Roughly 34% fewer homes were sold in August 2022 compared to the year prior. The median price for homes sold was also down 2% from the month prior. Zillow (NASDAQ:ZG)(NASDAQ:Z) estimates prices in Seattle are down just over 6% from peak pandemic pricing.

Los Angeles has been among the most expensive housing markets in the country for years. But things could be changing. It's estimated that the median home price is down around 6% from peak pricing. And July sales prices were down 1.6% from the month prior.

Boise has been one of the fastest-growing cities of the past decade. People from California, Oregon, and Washington have flocked to the city in droves, causing home prices to grow in the high double digits for years. But according to Zillow, home price growth is starting to slow, and prices are down around 5% from their peak pricing.

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San Jose, a city just south of San Francisco, has seen prices fall from their peak far faster than any other. According to Zillow, prices are roughly 9% lower than at their peak. The area has also seen a 51-point change in inventory since last year.

Austin held the title of one of the hottest real estate markets of the past decade. Like Boise, year-over-year home price growth was sustained in high double digits years before the pandemic housing boom. But according to Zillow, home prices are down 7% from their peak, and pending sales are down 28% from last year.

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Reno, known for being "the biggest little city in the world," was seeing large numbers of new residents in the wake of the pandemic. Home prices, however, are cooling quickly. August marks the third month in a row in which prices have fallen. Zillow estimates prices are down close to 6% since peak levels.

San Diego isn't too far behind San Francisco or Los Angeles in terms of falling home prices. According to Redfin, its price per square foot (PPSF) is 15.8% lower than last year. Plus, the number of homes with price drops is up 24%, while pending sales have decreased by 20%. Zillow estimates current prices are around 6% lower than at their peak.

Things are certainly getting weird with Portland's housing market. From June to July, prices were 1% lower, and inventory is currently 53% higher than it was one year ago. Higher supply and weakening demand mean fewer sales are taking place, and prices have fallen close to 5% from their peak.

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Salt Lake City has been another super-hot real estate market over the past decade. Billions of investment dollars have poured into the city's real estate market. Home prices, according to Zillow, are down just over 7% from their peak. In the Provo area, just south of Salt Lake City, prices are down around 4%.

Home prices in Phoenix are down around 4% from peak pricing. Inventory is also rising quickly, with pending home sales down 19.4%. While this red-hot market may be losing some steam, it's worth noting prices are still up over 22% from last year -- and have a long way to go before cooling off completely.

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Las Vegas is feeling the heat. Inflationary pressures and high interest rates are making this desert oasis seem a little less appealing. In August, home prices were down 3% from the month prior, and around 26% fewer homes sold within the last two weeks compared to the previous year. Negotiations are returning, and people are starting to see not just price drops but concessions offered when buying.

The biggest change Denver is seeing today is the number of newly listed homes for sale. Redfin reported roughly 85% more homes listed in August 2022 than the year prior. Pending sales aren't down too much, though, just 12% from 2021. And Zillow estimates pricing is only 4% lower than peak pricing.

Tacoma, Washington, lies roughly an hour south of Seattle. Like its bigger, more populated neighbor, Tacoma's housing market is cooling quickly. Home prices in July fell just over 3% from June's pricing, and PPSF is also down close to 13%.

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Florida's housing market seems to be holding strong. High demand from inward migration from Northeastern cities has kept home prices growing. Based on Zillow's and Redfin's data, there is only one city where prices are falling notably: North Port.

This small beach town saw a big boom during the era of pandemic relocation. Prices are only down around 2% from peak pricing, and the PPSF is falling. However, pending sales are still strong.

Raleigh continues to be one of the fastest-growing cities in the southeast, but demand for housing is slowing. Zillow estimates prices are down close to 4% from their peak, while Redfin has reported a notable uptick in housing inventory, bringing its PPSF down 10% year over year.

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Not every housing market is experiencing the same pricing pressures or downward trajectory. It all relates to the local market's supply and demand. Many of the markets on this list were experiencing abnormal home price growth for years prior to the pandemic housing boom, causing them to fall more quickly.

However, things are clearly changing. With rates expected to rise further this year, these markets could see prices fall further by year's end -- making it a great buying opportunity.

Liz Brumer-Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Redfin, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends the following options: short November 2022 $17 calls on Redfin. The Motley Fool has a disclosure policy.