The housing market is cooling as summer draws to a close and begins to transition into fall, with some cities around the U.S. seeing larger price decreases to attract buyers.
Home sellers are moving to meet buyers in the middle with price reductions as high mortgage rates contribute to affordability challenges, particularly in metro areas that saw significant price growth during the pandemic.
An analysis by Realtor.com found that the price per square foot decreased year over year for the 10th straight month in August, with nationwide prices down 1.8% from a year ago.
Around the country, median list prices fell year over year in three of the four major regions in the country (-3.6% in the Northeast, -2.6% in the South, and -2.1% in the West), and remained flat in the Midwest.
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The report found that the median list price per square foot fell in 36 of the top 50 metro areas in the U.S. in August compared with a year ago.
The largest declines were in Austin (-8.1%); Tampa (-5.6%); and Memphis (-4.1%). Metros that saw the largest gains were Providence, R.I., (+9.3%); Indianapolis (+4.4%); and Chicago (+3.6%).
Realtor.com senior economist Jake Krimmel said that “One common thread for most markets – including Austin, Tampa, San Antonio, Denver – is 2020-22 boomtowns continuing to give back some of their pandemic-era gains. These are also, by and large, places with much more inventory now than pre-pandemic norms.”
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San Francisco is an outlier in the analysis, as the city saw a 3.9% decline in list price per square foot in August from a year ago, which ranked fourth nationally despite the market remaining hypercompetitive.
The number of active listings in San Francisco was down 16.3% in July from the prior year, which compressed the housing market. The median listing price in the city remains high at $908,700, even though it has decreased by 5.2% year over year.
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“It’s not about San Francisco homes losing value, but rather how expensive the available inventory is this year relative to last,” Krimmel said.
“There are fewer small, pricey homes in the center of the city for sale. They are scarce and selling fast,” he explained. “On the flip side, this year there are relatively more large, less expensive per-square-foot homes coming up for sale in outer suburbs.”
Other metro areas that experienced the biggest annual declines in listing price per square foot in Realtor.com’s analysis include San Antonio (-3.6%); Denver (-3.4%); Baltimore (-3.2%); San Diego (-2.7%); Orlando (-2.6%); and Portland, Oregon, (-2.4%).
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