Home Prices Declined the Most in These 10 U.S. Cities in 2022

According to a recent Redfin (opens in new tab) report, home prices fell year over year in 19 of the 50 most highly-populated U.S. cities in 2022. 

The arrival of 6%-plus mortgage rates, record-low new listings, a predicted recession, and a record-low number of new listings drove U.S. home sales down 32% year-over-year, to their lowest level since at least 2015. 

Was your city on the list of the top 10 metros that saw the biggest home price cuts?

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Top 10 cities that saw home prices fall

Many of the cities with the steepest declines in home prices in 2022 recently experienced record prices, according to data from the National Association of Realtors (opens in new tab) (NAR). Unsurprisingly, the Redfin list heavily overlaps with our ranking of the 11 most expensive U.S. cities. 

The top four metros for price decreases are all located in California. All combine high demand, with years of limited home building to create abnormally elevated prices. These conditions leave even more room for prices to fall when market conditions shift, as they did through the end of 2022.

Here are the 10 biggest annual declines from Redfin’s report (opens in new tab): 

1. San Francisco, CA: -10.4% (biggest year-over-year drop since 2015)
2. Sacramento, CA: -5.6%
3. San Jose, CA: -5.4%
4. Los Angeles, CA: -4.6%
5. Detroit, MI: -4.4%
6. Oakland, CA: -4.2%
7. Seattle, WA: -3.9%
8. Pittsburgh, PA: -2.9%
9. Austin, TX: -2.8%
10. New York, NY: -2.4%

Housing market factors to watch in 2023

Kiplinger's housing outlook shows that existing-home sales have fallen every month since February 2022 and are down more than 35.4% from a year ago. Pending home sales recorded the second-lowest monthly reading in 20 years, according to NAR (opens in new tab). The run-up in mortgage rates has chilled buying activity, and increased economic uncertainty appears to be holding back both home buyers and sellers. 

A Freddie Mac (opens in new tab) research brief revealed that consumer confidence in the housing market declined to 34% in Q4 2022 — down 12% from Q3 2022 and down nearly 30% from Q4 2020. Meanwhile,  44% of homeowners and 70% of renters are concerned about making their housing payments. 

Freddie Mac reports that the U.S. weekly average for a 30-year fixed mortgage sits at 6.33% as of January 12, 2023. Months of elevated mortgage rates not seen in decades as reported by the St Louis Fed (opens in new tab) have kept some potential buyers on the sidelines.  Mortgage interest rates will likely moderate over the course of 2023, somewhat evening the playing field for more cost-conscious home buyers.

A gradual improvement in affordability as home prices fall and mortgage rates decline should allow existing-home sales to recover by the end of 2023.

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