AUSTIN, Texas — Home prices in the Austin metro area are dropping more than in any other city in the country, according to a new report from Realtor.com.
Realtor.com said prices are down in some metro areas because high mortgage interest rates have thinned out the ranks of buyers who can still qualify for a home loan, while also also sharply reducing the price of homes the remaining few in the market can afford.
"Homes are now sitting on the market longer, inventory is piling up and sellers – at least in some markets – are cutting prices," Realtor.com said.
"Post-COVID, things went crazy all of a sudden," Matt Holm with Compass Realty said.
To figure out where in the U.S. home prices dropped the most, Realtor.com looked at the monthly median home list prices in the 100 largest metropolitan areas, then calculated the price change since June, when markets peaked nationally. Then they included only the metro with the biggest drop in any state, to ensure geographic diversity.
Among those, Austin came in at No. 1 for the biggest price drop. In September, Realtor.com reports that the median home list price in the Austin metro was $558,275. That's down 10.3% since June. Holm attributes the drop to interest rates and seasonal sales.
"We saw a very early slowdown when inventory was just coming up, so we had supply coming on the market," Holm added. "At the same time, we had rates shoot up and buyers that all of a sudden got nervous. So it was quite a shift and it's continuing to shift, and the Fed is continuing to raise rates and threatening to raise rates."
Realtor.com noted that the city is still up 2.2% year-over-year, but that's the lowest remaining gain on the list.
Even so, Holm believes this drop won't last too long.
"It's going to be a blip that we have, in my opinion, over the next four months to 12 months, depending on when rates turn back down," Holm hypothesized. "All those renters who are causing 35% increases over the last 18 months and another 10 to 15% increase next year, they'll get tired of those rents. Rates go back down, and they flood the market as buyers as soon as that happens. And so that's where I think, you know, we're going to be in a unique situation where it's just going to turn on again as quickly as it turned off."
Meanwhile, the percentage of sellers in the metro area who cut their list prices was up 252% in September compared with 2021.
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