7 Places Where Home Prices Are Due for a Correction

Two years after mortgage rates jumped higher, the laws of supply and demand might be about to take a toll on the housing market, according to Realtor.com.

Some experts think a price correction is imminent. Others are a bit gloomier and are forecasting a crash.

Realtor.com recently looked at data for the nation’s 150 largest metros. The website’s analysts then focused on housing markets that have seen the largest growth in the number of homes for sale year over year. They also looked at places where homes are sitting longer on the market than they were last year.

After comparing these numbers to the same numbers from two years earlier, they further pared the list by choosing metros where the number of homes for sale was above where it was in 2019, before the housing market began to soar.

After all that number-crunching, the Realtor.com analysts determined that in the following housing markets, “list prices appear fated to fall in coming months,” making a correction a real possibility.

Corpus Christi, Texas

Number of homes for sale: 2,136 (up 131% from two years ago)

Median days on the market: 69 (up 31 from two years ago)

Homes now tend to languish on the market for more than two months in Corpus Christi. Hannah Husby, a real estate agent with Keller Williams Coastal Bend in Corpus Christi, told Realtor.com:

“There’s still the mindset of sellers to think like, ‘Oh, I can just put whatever price and I’ll get it and I’m just going to wait for the right person to come along.’ But buyers are just not there at the prices that the sellers want.”

Palm Bay-Melbourne-Titusville, Florida

Number of homes for sale: 3,647 (up 243% from two years ago)

Median days on the market: 50 (up 21 from two years ago)

Palm Bay is one of several Sunshine State cities where prices might drop soon. That’s great news for buyers, as the already-affordable city midway between Orlando and Miami recently made the list of “6 of the Cheapest Places to Live in Florida.”

McAllen-Edinburg-Mission, Texas

Number of homes for sale: 2,330 (up 143% from two years ago)

Median days on the market: 64 (up 25 from two years ago)

Prices are up 4% year over year in McAllen, according to Realtor.com. However, the soaring demand for homes that sent values higher in Texas over the past several years might be abating.

Denver-Aurora-Lakewood, Colorado

Number of homes for sale: 7,539 (up 120% from two years ago)

Median days on the market: 29 (up 19 from two years ago)

Of all the cities on this list, Denver has seen sales slow the most, according to Realtor.com. It now takes three times as long to sell a home in the city than it did two years ago, and 57% of homes for sale have a price reduction.

Deltona-Daytona Beach-Ormond Beach, Florida

Number of homes for sale: 5,435 (up 219% from two years ago)

Median days on the market: 62 (up 35 from two years ago)

Falling demand in the Deltona area represents a microcosm of what is taking place in much of Florida.

In a summary of the website’s findings, Hannah Jones, Realtor.com senior economic analyst, says the Sunshine State is a desirable place to be — as long as the homes remain affordable. But as prices climb, they are “no longer a great opportunity.”

Ocala, Florida

Number of homes for sale: 2,731 (up 239% from two years ago)

Median days on the market: 59 (up 29 from two years ago)

In recent years, typical home values in Ocala rose sharply. But things have changed more recently, as they have in housing markets throughout Florida.

Orlando-Kissimmee-Sanford, Florida

Number of homes for sale: 10,087 (up 174% from two years ago)

Median days on the market: 51 (up 24 from two years ago)

In just two years, the number of homes for sale in Orlando has tripled, Realtor.com says. The average time on market has nearly doubled during that time.

Orlando is also one of the “15 U.S. Cities Most Impacted by High Interest Rates.”