It feels like it’s been years since I wrote consecutive stories that held positive news for homebuyers.
In more than a decade covering mortgages and housing markets, most of the headlines have focused on rising rates, tight inventory, bidding wars, and worsening affordability.
Not today. Buyers are about to get their second good-housing-news story this week— and it should leave many feeling fairly hopeful.
Home prices take biggest tumble in 9 years
The just-released May Monthly Housing Report from Realtor.com shows that home prices took their largest tumble in years last month. The median listing price for May was $429,500 — down 2.4% from one year ago and the steepest annual drop seen since 2017.
The average price-per-square-foot fell even more at -2.5% — a record-setting decline, according to the listing platform.
Price declines were the biggest in the West, where listing prices fell -4% year over year.
At the metro level, Austin, Texas, saw prices fall the most at -8.3%, while Memphis and Buffalo, NY, saw -5.9% and -5.8% declines, respectively.
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The best news, says Realtor.com senior economist Jake Krimmel, is that price reductions are down compared to a month ago. While over 17% of listings saw a price cut in May, the number is down 1.6% from a year ago — something Krimmel says indicates a more manageable market than we’ve seen in the recent past.
“Perhaps the most telling price signal in May came from what did not happen: price cuts fell rather than rose,” said Jake Krimmel, senior economist at Realtor.com. “In a crashing market, sellers list optimistically and get forced to cut. What we’re seeing is different in a key way: sellers are using current market conditions as price discovery from the start, pricing for current conditions rather than selling under distress.”
“That combination tells you sellers have internalized the more buyer-friendly conditions and are adjusting price expectations before listing rather than after. This is a meaningful behavioral shift, and it’s precisely why buyers are still showing up despite rates above 6.5%,” Krimmel says.
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Home listings rise, giving buyers more options
As if lower listing prices weren’t enough, buyers actually have more listings to choose from these days, too. Total active listings for May jumped 5.6% between April and May, and 2.2% over a year prior.
There were nearly 475,000 new listings in May alone.
Buffalo saw the biggest year-over-year increase in listings at 19.9% over April, followed by Providence, RI, and Richmond, VA. The increase in inventory may help explain Buffalo’s decline in listing prices. As supply rises and buyers have more options, competition can ease and put downward pressure on prices.
At the regional level, the best news came for buyers in the Midwest, where listings jumped more than 8% over the last year. The Northeast saw a 7.2% increase in listings over the same period.
“The Northeast and Midwest reversal matters because both regions have been inventory-starved for years, locked in by homeowners sitting on low-rate mortgages with little incentive to list,” Realtor.com reported. “The fact that new listings in the Northeast are now running nearly 9% ahead of last year — compared to a decline just two months ago — is a meaningful signal that the lock-in effect may be loosening where buyers need relief most.”
It was the second positive month in a row for new listings. Realtor.com’s previous report shows that new listings jumped 4% in April, notching the highest April numbers since 2022. Listing prices decreased that month, too.
It’s not enough to solve the “housing market mismatch” that the National Association of Realtors noted recently, but it’s a move in the right direction. As Chris Lim, president and chief growth officer at REMAX, says, it’s “a market that’s continuing to find its balance.”
“Overall, it’s a steadier, less competitive environment than we’ve seen recently, and that’s giving both buyers and sellers a better chance to make confident decisions,” Lim says.
Related: The housing market may finally be favoring homebuyers