(Bloomberg) — US cities that saw some of the biggest jumps in home prices during the pandemic now have the largest shares of price cuts, according to data compiled by Zillow Group Inc.
Overall, the proportion of active real estate listings with lower prices has increased in all 50 of the largest US metropolitan markets tracked by Zillow. In these cities, 11.5% of homes saw a price cut in May, on average, up from 8.2% a year earlier.
The share of lower listing prices rose the fastest in real estate hotspots like Salt Lake City, Las Vegas and Sacramento, California, according to Zillow.
The recent run-up in borrowing costs, driven by the Federal Reserve’s hikes in interest rates, has deterred would-be buyers and started to cool some markets.
Among the 50 metros in Zillow’s data, 32 had more than 10% of listings with a price decline. In eight cities, the share has jumped by at least 5 percentage points over the past year.
The Fed’s rate hikes, combined to rising home prices, have pushed the median mortgage application payment to $1,897 in May. Payments have increased $513 in the first five months of the year, according to data compiled by the Mortgage Bankers Association.
“The ongoing affordability hit of higher home prices and fast-rising mortgage rates led to a slowdown in purchase applications in May,” Edward Seiler, associate vice president of housing economics at the MBA, said in a statement last week. “Inflationary pressures and rates above 5 % are both headwinds for the housing market in the coming months.”