Few analysts, however, expect the market to crash as it did after the 2008 subprime mortgage crisis, in part because of stricter underwriting practices and a massive swell of home-price appreciation over the last two years.
"If you bought in 2020, you still have a lot of equity," said Nicole Bachaud, a senior economist with Zillow. The company predicts that national home prices will rise a modest 1.2 percent from August 2022 to August 2023 — well below the 14 percent spike from August 2021 to August 2022.
Still, price cuts are coming, real estate agents and analysts said, especially in markets that saw some of the most frenetic surges in pricing.
"This is the slowest market that I've seen in 15 years," said Andrew Vallejo, a Redfin agent in Austin, Texas, which had one of the most active real estate markets after the start of the pandemic.
The median home sale price in the Austin metro area peaked at $555,000 in April 2022, an astounding 71 percent increase from April 2020, when the median sale price was $325,000, according to Redfin data. But since April, the median price has declined every month, landing at $500,000 in August.
Mr. Vallejo said he bought a three-bedroom fixer-upper in Austin for $450,000 in 2021, when mortgage rates were still near record lows. He estimated that he could have sold the property earlier this year for more than $600,000, based on improvements he made and comparable sales nearby, but that after the recent mortgage rate hikes, much of that appreciation has been wiped out.
"I think the challenge is, we don't know how long this rapid decline is going to last," he said of home prices. "A lot of buyers and sellers are trapped, in a way."
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