A significant shift is underway in the U.S. housing market as nearly one-third of the 100 largest metropolitan areas now report annual home price declines of at least one percentage point. This trend is driven by a combination of factors including persistent high mortgage rates, increasing housing inventory, and weakening buyer demand.

In June, annual home price growth slowed to just 1.3%, down from 1.6% the previous month, the lowest pace in two years. While single-family home prices still managed to rise slightly by 1.6%, condominium values dropped 1.4% nationwide, highlighting the uneven nature of the market’s performance.

The housing inventory has grown by 29% year-over-year as of June, marking a notable uptick in supply. However, the rate of growth has started to cool since the spring. Meanwhile, the average 30-year fixed mortgage rate has remained in the high 6% range for most of the year, more than double what was seen during the pandemic boom.

Market experts suggest that homeowners may become increasingly hesitant to list their properties due to slower sales and declining prices in many areas. This caution could reduce the influx of new listings, further complicating the supply-demand balance.

Regionally, the Northeast and Midwest are still seeing strong price gains, contrasting with the softening markets in the South and West. Cape Coral, Florida, has experienced the steepest drop, with home prices falling over 9% from recent highs. Other major metros such as Austin, Tampa, and seven of the ten largest California markets have also reported price declines.