The once-booming tech haven of Austin, Texas, is now leading the pack in the fastest-falling home prices across the nation, according to a new report.
Thanks to sky-high mortgage rates and cooling demand, Austin’s property values took a 3.5% nosedive over the past year, outpacing the top 100 markets in the US.
Austin’s recent years of skyrocketing property values were fueled by a booming tech industry and attractive low state taxes. However, those glory days seem to be fading.
CoreLogic’s latest report paints a picture of a nationwide cooling in the housing market, with Austin being the most dramatic example.
Overall, home prices appreciated by 4.9% nationally in May. But in a few notable cities, the story was different.
San Francisco experienced a 2.6% drop, while New Orleans saw a 0.9% decline. In Florida, Cape Coral and North Port also felt the chill, with prices dipping 0.6% and 0.2%, respectively.
The surge in mortgage rates to around 7% for a 30-year fixed-rate deal has put a damper on the market. In May alone, 16 of the 100 largest metros saw price declines, with El Paso, Texas; Gary, Indiana; and Buffalo, New York among the top five.
Despite the downturn, 34% of homes sold over the asking price in June, a jump from the pre-pandemic average of 23%. This trend is driven by strong demand in high-priced, low-inventory markets.
About 100,000 borrowers were six months or more past due on their mortgages in May, a level not seen since before the financial crisis.
Yet, foreclosure rates fell to 0.2%, the lowest since early 2022, suggesting many late-stage delinquencies are being resolved.
The share of adjustable-rate mortgage (ARM) originations hit a yearly high in May. ARMs, which have interest rates that fluctuate based on market conditions, are gaining traction as fixed-rate mortgages climb. Despite this, ARMs still only make up 5% of outstanding mortgages, a far cry from the 20% seen before the financial crisis.
In June, 8.6% of homes under contract were appraised below their sales price, down from 10.7% a year ago. This shift brings appraisal gaps back to pre-pandemic levels, with smaller starter homes being more susceptible to overvaluation by first-time buyers.
Sales of newly-built homes plummeted 17% in the first half of the year, with only Portland, Oregon, and Las Vegas, Nevada, bucking the trend, each up by 2%.
Investor activity also cooled, making up 23% of single-family home purchases in June, down from 28% in January. This is the lowest investor share in two years, but still higher than pre-pandemic levels.
Sales of existing homes tumbled 19% in June compared to last year, with an early seasonal slowdown likely driven by a surge in mortgage rates. However, pending sales in June were up 9% from 2023, hinting at a possible rebound.