Evidence That The Real Estate Market is Beginning To Turn

In Connecticut’s collegiate New Haven, where the median asking price for a home rose significantly over the past year, broker John Cuozzo has noticed a shift.

“You’re seeing somewhat of a slowdown in aggressive asking prices,” says Cuozzo, who co-founded New Haven’s Press/Cuozzo Realtors, adding that price cuts have become more frequent over the past several weeks and that this summer has felt like a more typical one for the area’s university-driven market.

That’s not an anomaly as the housing market shifts into a lower gear. Across the U.S., buyers are feeling squeezed as mortgage rates and home prices have risen significantly. About 3.2 million first-time buyers could be priced out this year, according to an estimate from National Association of Realtors senior economist Nadia Evangelou.

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“We’re seeing a cooling off from an impossibly frothy market, where there were just way too many buyers relative to the number of sellers,” says Benjamin Keys, a professor of real estate at the University of Pennsylvania’s Wharton School, who says higher mortgage rates may also deter homeowners who bought or refinanced at near-record low rates during the pandemic from entering the market.

Those twin dynamics have helped take some air out of highflying listing-price increases. In June, the median listing price of a home was about 17% higher than the previous year, according to Realtor.com—a slight deceleration from the month prior. (Barron’s and the company that operates Realtor.com are both owned by News Corp.)

To uncover areas where listing-price growth has slowed most sharply, Barron’s used Realtor.com data from 100 of the most populous U.S. metropolitan areas and found where June’s median listing-price growth was lower than its 12-month average.

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Nationally, listing-price growth in June is still above the past year’s average of 12%, the analysis found.

But some metros have seen a more significant slowdown in year-over-year price increases. In New Haven, for example, the data showed that median year-over-year listing-price growth in June was about half of its 12-month trend.

To minimize the impact of a seasonal slowdown, we analyzed areas’ year-over-year listing-price changes instead of month-over-month. To spot areas where a trend of fast price growth could be reversing, we excluded metros where listing-price growth was negative over the past year.

Listing prices aren’t necessarily a proxy for sales prices, which can get bid up or bargained down—but that doesn’t mean they’re meaningless. “Slowing listing prices are almost certainly a leading indicator of slowing or lower sales prices,” says Ralph McLaughlin, chief economist at real estate start-up Haus.

Connecticut’s Fairfield County, an exurb of New York City popular with longer-distance commuters, topped the list. The median listing price in the Bridgeport metro area was $982,000 in June—a 4% increase from the year prior and 28 percentage points below its 12-month average increase of 32%. “The environment has changed,” says Amy Barsanti of William Pitt Sotheby’s International Realty in Darien, Conn. “Houses are no longer selling with multiple offers the first weekend.”

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The red-hot fevers in Boise, Idaho, and Austin, Texas, Nos. 2 and 3 on our list, broke too, the data show. Median listing prices in both of these metros posted the slowest year-over-year growth since 2020 in June.

In Austin, the typical summer lull has returned for the first time since the start of the pandemic, says Cord Shiflet, a real estate agent and president of the Austin Board of Realtors. That’s a much-needed break for buyers still in the market, who Shiflet says are no longer competing against dozens of other offers in a short period.

In Boise, where home prices surged during the pandemic, Re/Max Capital City agent Sheila Smith says she is seeing “an extreme amount” of price drops and lots of new listings. “All we’re doing really is getting back to a more balanced market,” Smith says. “It’s just happening on steroids.”

Other areas where median listing-price growth is lowest compared with its 12-month average include McAllen, Texas; Baton Rouge, La.; Las Vegas; Fresno, Calif.; Hartford, Conn.; and Denver.

Cooling Down

These metropolitan areas have seen the biggest slowdowns in listing prices compared to their one-year trends.

Metropolitan AreaMedian Listing Price*Median Listing Price Growth, YoY, 12-Month Average**Median Listing Price Growth, YoY*
Bridgeport, Conn.$982,00032%4%
Boise, Idaho587,9002210
Austin, Texas620,0003019
New Haven, Conn.362,400167
McAllen, Texas275,000147
Baton Rouge, La.336,995149
Las Vegas499,4502925
Fresno, Calif.445,0001511
Hartford, Conn.375,0001511
Denver680,0001613
U.S.$450,00012%17%

A slower rate of home-price growth isn’t unexpected. The Mortgage Bankers Association, a trade group, anticipates home prices in the third quarter of 2022 to be 5.6% higher than the year prior—a significantly slower rate of annual appreciation than the 18.6% gain in the same quarter last year.

Nor does it portend disaster. Slower home-price growth “doesn’t mean that the market is collapsing, it doesn’t mean we’re in a recession,” says Wharton’s Keys. “This cooling off is a normalization of the market.”

More markets could be in for a similar slowdown in the coming months. “Price growth over the next year is going to be very, very different than what it has been over the past year to two years,” says Haus’s McLaughlin, who expects minimal price growth over the next year, with declines in some markets. “The big wild card is going to be what happens with supply,” he says.