NEW YORK — After nearly four years of relentless price increases, the U.S. housing market is showing signs of a notable cooldown, with home prices declining month-over-month in 15 of the 20 largest metropolitan areas for the first time since 2019, according to data released Tuesday by the National Association of Realtors.
The median existing home price fell 0.8% nationally in February compared to January, marking the third consecutive monthly decline. Year-over-year, prices remain elevated at $389,000, but the pace of appreciation has slowed dramatically from the double-digit gains seen during the pandemic housing boom.
"We're witnessing a market in transition," said Lawrence Yun, chief economist at the National Association of Realtors. "The combination of higher mortgage rates, increased inventory, and buyer fatigue is creating conditions we haven't seen in years."
Inventory levels have risen to 3.8 months of supply, up from a historic low of 1.6 months in early 2022. While still below the 6-month level typically associated with a balanced market, the increase has given buyers more negotiating power and reduced the frenzied bidding wars that characterized the pandemic era.
The shift is most pronounced in markets that saw the largest gains during the boom, including Austin, Phoenix, and Boise. In Austin, median home prices have declined 12% from their peak, while Phoenix has seen an 8% pullback. However, supply-constrained markets like New York and Boston have proved more resilient.
"Geography matters enormously right now," said Skylar Olsen, chief economist at Zillow. "Markets that attracted remote workers during the pandemic are seeing the most significant corrections, while traditional economic centers with limited housing stock continue to see relative stability."
For prospective buyers, the cooling market presents a mixed picture. While competition has eased, mortgage rates hovering near 6.5% mean monthly payments remain elevated despite lower prices. First-time buyers, in particular, continue to face affordability challenges, with the typical mortgage payment consuming approximately 27% of median household income.
Industry analysts expect the gradual softening to continue through 2026, though few predict a dramatic crash. Most forecasts call for flat to slightly declining prices nationally, with significant regional variation based on local economic conditions and housing supply.