Stymied Sellers Back Down as Home Prices Drop for the First Time Since Spring

Sellers and buyers spent the summer months locked in a standoff amid a stalled housing market, but last week, the sellers finally flinched.

The week ending on Sept. 6 saw both the national median list price and the median list price per square foot, which accounts for home size, decrease annually, according to the latest Weekly Housing Market Trends report from Realtor.com®.

"This is the first annual retreat in listing prices since the spring, and the first annual drop in price per square foot in two years," says Realtor.com senior economic research analyst Hannah Jones.

As persistent affordability challenges, including elevated mortgage interest rates, rising unemployment, and inflation, keep buyers on the sidelines, sellers are adjusting their expectations and are looking for a price point that may break the impasse and attract some offers.

While the national housing market remains balanced in terms of supply and demand, a handful of metros shifted into buyer's market territory this summer, underscoring the broader shift in market conditions, says Jones.

Home prices see first drop in months

For the first time since the spring, the median list price fell 0.9% compared to the same period a year ago, following four weeks of flat year-over-year home prices.

Adjusting for size, the price per square foot dropped, the first decline in this category since 2023.

"Price per square foot had been growing steadily for almost two years, but the weak sales activity has finally caught up and stalled out this metric, suggesting underlying home values are starting to soften," says the analyst.

Inventory growth slows as sellers withdraw

New listings—a measure of sellers putting homes on the market—dropped 1.9% last week from a year ago, marking the first decrease since April and the largest annual pullback since January, as frustrated sellers continued to withdraw from the market after a "cruel summer."

"The best time of year to buy a home, typically in early to mid-October, is approaching, but buyers may find more lingering summer listings than an influx of fresh options," notes Jones. "The softening new listing trend means that inventory improvements have stalled nationally."

The overall number of for-sale properties saw an 18.4% year-over-year increase, continuing a slowdown in growth for the 12th straight week.

And yet, last week was the 96th consecutive week of annual gains in national home supply. There were roughly 1.1 million properties for sale last week, marking the 19th consecutive week over the million-listing threshold.

"Active inventory is growing significantly faster than new listings, an indication that more homes are sitting on the market for longer," says Jones.

Sales remain slow, but not everywhere

The sluggish sales pace continued last week, with the typical listed property waiting for a buyer six days longer than a year ago.

According to Jones, that's because still-high home prices and mortgage rates in the mid-6% range, combined with general economic uncertainty tied to a lack of affordability and job security, are holding buyers back, despite ample options.

However, Jones stresses that conditions are far from uniform across the U.S. and vary greatly from one region to the next.

"The West and South see relatively high inventory and a slow market pace, which is driving the national figure higher despite relatively tight conditions in the Midwest and Northeast," she explains.