Home sellers are slashing prices in these 13 cities, and there's new evidence that houses will get even cheaper in early 2024

Home values have held up this year despite historically high mortgage rates, but a new report from Realtor.com suggests that property prices could fall under pressure in the coming months.

US houses cost $425,000 in October, which is about as much as they did a year ago, according to a November 2 press release from Realtor.com. The firm said that price growth was flat — even as mortgage rates rose to a 23-year-high. Higher borrowing costs dampened demand, though it’s possible homebuyers were worried that mortgage rates would soar even higher and wanted to buy before that could happen.

“While record-high mortgage rates are putting off many would-be buyers, decreases in both inventory and time homes spend on the market shows that some buyers are moving quickly to lock in rates before they can go any higher,” said Danielle Hale, Realtor.com’s chief economist, in a statement for the report.

Limited supply kept property prices afloat, as Realtor.com found that inventory fell 2% from October 2022. That marked the fourth straight month that listings declined from the prior year, Hale noted, adding that the number of homes for sale is down 39% since October 2019.

“Listing prices continue to be buoyed by scarce inventory, and while new home sales increased in September, construction activity isn’t enough to fully bridge the low inventory gap,” the report read.

Houses are hardest to find in the West and Northeast, according to Realtor.com. Listings in those regions dropped 24.7% and 10.4%, respectively, from last October compared to a 4.8% slide in the Midwest and a 3.3% inventory gain in the South. There were fewer homes on the market than last year in two-thirds of the 50 largest US metropolitan areas.

Home price softness may swing the market in buyers’ favor

Although scarcity gives sellers leverage in most markets, their stranglehold over buyers may be nearing an end.

Homeowners are trimming asking prices at an increasingly high rate, Realtor.com found. The proportion of properties that have seen price cuts has steadily climbed on a month-over-month basis and reached 18.9% in October, according to the listing site. While that’s down from a 21.5% clip last fall, it’s materially higher than the pre-pandemic mark of 17.4%.

“While home prices stayed flat, the share of price reductions, while down year over year, continued to grow on a monthly basis, indicating that home prices could potentially soften in the coming months,” the report read.

It’s worth noting that those cuts haven’t yet translated to widespread home price declines. Just five of the 50 biggest real estate markets in the US saw prices fall outright from 2022: San Antonio, Texas; San Jose, California; Memphis, Tennessee; Dallas, Texas; and Miami, Florida.

13 cities where sellers are cutting prices

While listing prices are falling across the nation, the trend is especially noticeable in the South and Midwest. Thirteen of the 50 largest US metro areas had a higher rate of homes with price cuts than last October, according to Realtor.com, and most were in those two regions.

Below are those 13 cities, along with the median home price, year-over-year growth for median home prices nominally and on a per-square-foot basis, the share of homes with reduced prices, and the growth of the share of homes with lower prices.