Home prices post record drop as buyers rush back into a suddenly cheaper market

America’s red-hot housing market may finally be coming back down to Earth.After years of bidding wars, elevated interest rates, sky-high asking prices and buyers getting priced out, sellers across the country are slashing expectations as home values post their biggest drop in nearly a decade.And in a twist few saw coming, buyers are racing back in.For frustrated house hunters, the long-awaited correction appears to be opening a window of opportunity.The national median listing price fell 2.4% in May from a year earlier to $429,500, according to Realtor.com’s latest housing report.

It marks the steepest annual decline since the company began tracking the data in 2017 and extends a seven-month streak of falling asking prices.Even with mortgage rates stuck above 6.5%, inflation still weighing on household budgets and growing uncertainty tied to the ongoing conflict in the Middle East, buyers are proving far more eager than many economists expected.Pending home sales climbed 4.3% from a year ago, notching a sixth straight month of gains, while fresh inventory hit its highest May level since 2022.“Those two trends are not a contradiction,” Realtor.com senior economist Jake Krimmel said.

“Sellers are pricing to sell rather than pricing to test the market.Buyers, despite rates remaining higher than expected, are still showing up when prices are within budget.”In other words, the market isn’t crashing.

It’s finally behaving like a market again.Rather than swinging for the fences with pandemic-era price tags, sellers are increasingly coming to terms with a new reality.The share of listings featuring price cuts actually fell to 17.5% in May, suggesting homeowners are doing their homework before putting up a “For Sale” sign instead of chasing unrealistic numbers and cutting later.“While the pandemic times encouraged sellers to shoot for the stars with pricing, those days are in the rearview mirror now, and I’m a big believer in pricing accurately,�...