Tampa to Dallas: Home prices drop in 60 major US cities as housing market splits

Increased supply in states like Arizona, Texas, Florida, and Louisiana is driving slight price drops in many housing markets.

Home prices are declining in 60 of the 300 largest U.S. metropolitan areas, up from 42 in February and 31 in January, per ResiClub's latest analysis. While tight inventory fuels price growth in the Northeast and Midwest, increased supply in states like Arizona, Texas, Florida, and Louisiana is driving slight price drops in many markets.

Home prices are dropped in 60 major US cities. (Pixabay)

Where are the declines happening?

The YoY declines are evident in major metropolitan cities such as Austin (-4.6%); Tampa (-4.5%); San Antonio (-2.7%); Phoenix (-2.5%); Dallas (-2.4%); Jacksonville(-2.3%); Orlando (-2.2%); New Orleans (-1.9%); Atlanta (-1.8%); and Miami (-1.5%).

Homebuyers are now gaining an edge in markets experiencing the most price softness – largely concentrated in the Sun Belt, especially the Gulf Coast and Mountain West. These areas witnessed significant price surges during the pandemic, often exceeding local income growth. Ad pandemic-driven migration cooled down and mortgage rates climbed, areas like Tampa and Austin faced difficulties sustaining inflated home prices based on local income.

The increasing availability of new homes in the Sun Belt is exacerbating this softening trend. To maintain sales, builders of the homes frequently offer price reductions or further incentives, which then exerts downward pressure on the resale market. Some buyers who might have previously considered existing properties are now choosing new construction due to more attractive deals on them.

What must you do?

Keep an eye on how many homes are for sale. If cities like Tampa keep having a lot more homes on the market than before the pandemic, it could mean prices will keep dropping, giving buyers more chances.