Homebuyers have a better shot at scoring a deal on a house in the 14 cities where home prices have plummeted the most

Thu, 02/16/2023 - 12:13

A shot of San Jose houses. — Houses in San Jose, California, where home prices dropped 12.7% since their peak in 2022.
Sean Duan/Getty Images

According to Black Knight, 14 of the 50 largest US markets have seen home prices fall by 6% or more.
The San Francisco Bay Area leads the nation with the largest drop in home prices.
Softening home prices in some of the most expensive cities will benefit buyers.

Fatigued home shoppers across the country have more of a reason to relax — if ever so slightly — as home prices continue to slide from their peak in 2022.

Steep mortgage rates and still-high home prices in major cities sidelined many homebuyers last year who may not have been able to stomach such high monthly payments. But there's a chance for them to come off the sidelines — in fact, some already have — as prices fall in some key areas.

The biggest declines have taken place in some of the priciest markets throughout the western United States, a February report from research firm Black Knight reveals. Leading the nation with the largest drop from the 2022 peak is San Francisco, where home prices have fallen nearly 17%. Other cities with double-digit home-price declines from last year's peaks include Seattle, San Jose, and Phoenix.

"Price declines are more pronounced in the Western U.S. with every major market in the West seeing prices pull back by 6% or more through December on a seasonally adjusted basis," researchers wrote, adding that 14 of the 50 largest markets have witnessed home prices fall by 6% or more from their 2022 peaks.

Still, it's very expensive to buy a home in San Francisco and Los Angeles. In a separate report from the California Association of Realtors that focuses on the third-quarter of 2022, the state-wide median home price for the period was a staggering $829,760. That's twice as expensive as the US median of $372,700, according to current Fed data.

Here's a look at the cities with the biggest home-price declines as well as how much a typical home costs, according to Redfin's December data. Buyers could consider these spots as places to score a deal — as long as mortgage rates don't rise any further.

14. Portland, Oregon