American real estate prices have been on a rollercoaster. Early in the pandemic, Americans became mobile. Some people who could work from home moved. Many relocated from expensive cities on the east and west coasts to less expensive markets inland. In many cases, people thought these smaller metros had a better quality of living. (These are America’s hottest housing markets.)
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The ability to move was also fueled by mortgage rates that dropped as low as 3%. That figure has recently risen to 6% quickly, which cut back on home purchases considerably. It has also hurt sales in some cities, most of which had the most significant run-ups in price over the past three years.

In its “May Housing Report: Home Price Gains Slow to Lowest Rate on Record,” Realtor.com reported that median listing prices in the month rose only 0.9%. Danielle Hale, chief economist for Realtor.com commented:

April and May are historically popular months to buy, and typically by this time in the year we’ve exceeded the prior year’s peak home price. Weakening home price growth for the past 12 months is increasing the odds that we may not see a new home price peak this year, for the first time in the history of our listing data, which dates back to mid-2016, and this is likely welcome news to homeshoppers.

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The median price of a home for sale in May was $440,000, near the highest level since the figure started to be measured. In some markets, the number was much more. In general, these are markets that have been unpopular with buyers. The median home price for sales in San Jose was $1,530,000. The comparable figure for San Francisco was $1,178,000.

Cities that had an influx of home buyers had prices that rose quickly. These include Tampa, Phoenix, Austin and Las Vegas. Austin home prices have been hit hard—much harder than any large city. A home’s median sale price fell 7.3% compared to the same month last year. It is still a relatively expensive market with a median home price of $584,000. Prices in Phoenix fell 3.6% to $529,000, another example of a “hot” market that has cooled.

Home buyers face other challenges. Mortgage rates will stay high, at least in the short term. And many economists believe a recession is coming. The trouble in Austin has just started.

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