BAM Key Details:

  • The latest Redfin report ranks U.S. metros with housing markets that have cooled down the fastest from February 2022 to February 2023. 
  • Housing markets in tech hubs and pandemic hotspots are cooling the fastest this year, while markets in Connecticut, New York and areas in the Midwest are holding up the best. 

Is your market heating up or slowing down this spring? The dichotomy of the current market has some areas seeing multiple offers flood in while others are experiencing a slower pace and a rise in seller concessions

So, which markets are cooling off the quickest? 

The latest Redfin report has the answer, and we’re here to break it down for you. Keep reading for the 10 housing markets cooling the fastest—and 10 that continue to hold strong.

10 Housing Markets Cooling the Fastest

Redfin set out to determine the markets that have cooled down fastest from February 2022 to February 2023 by analyzing year-over-year changes in prices, price drops, inventory, pending sales, sale-to-list ratio and days on market. 

Based on the above, the 10 housing markets cooling the fastest this year are:

  1. Austin, TX
  2. Seattle, WA
  3. Phoenix, AZ
  4. Tacoma, WA
  5. Denver, CO
  6. Las Vegas, NV
  7. Stockton, CA
  8. San Jose, CA
  9. Sacramento, CA
  10. Oakland, CA

This list is comprised of housing markets in West Coast tech hubs and pandemic boomtowns—areas that are seeing a slowdown for several reasons:

  • Tech layoffs and volatile tech stocks. The tech industry is experiencing a high rate of layoffs. In addition, tech stocks fell more than 30% in 2022. Combined, these factors are impacting tech hubs, which are concentrated in the Bay area And Seattle area. 
  • Low inventory. Low inventory remains an issue nationwide. Because homeowners are unwilling to let go of low mortgage rates, they’re not listing homes for sale. In turn, home sales remain low. 
  • High home prices. Despite cooling in these areas, the pandemic boom increased prices to the point that they have become unsustainable. This makes homeownership unaffordable for many would-be buyers. And in areas where home prices are declining, buyers are wary about purchasing a home that may lose its value. 
  • High mortgage rates. Mortgage rates remain more than double what they were in 2020 and 2021. This exacerbates the affordability issue for homebuyers.

Pandemic boomtowns face their own set of challenges. People in search of affordable (and sunny) living flocked to areas like Austin, Phoenix, Las Vegas and Sacramento during the pandemic. With this, local home prices escalated, pricing out local residents and contributing to price drops and seller concessions. 

It’s important to note that even though these markets have cooled the fastest, they remain sellers’ markets. Inventory is low across the nation, keeping home prices high. In addition, agents have noted an uptick in competition in the past couple of weeks as mortgage rates have dropped after the SVB collapse

10 Housing Markets Holding Strong

The same Redfin report also analyzed the metros where competition remains high. Here are the top housing markets holding strong in 2023:

  1. Hartford, CT
  2. Milwaukee, WI
  3. New Haven, CT
  4. Bridgeport, CT
  5. Albany, NY
  6. Rochester, NY
  7. Lake County, IL
  8. McAllen, TX
  9. Wilmington, DE
  10. Chicago, IL

These markets may not be as hot as they were in early 2021—pending sales and new listings have dropped (Hartford saw a 16% year-over-year decline in pending sales in February). However, other metrics from the report show that more homes are going under contract in under two weeks compared to a year prior and the median price per square foot has increased.  

The markets on this list have a couple of common factors that are keeping the competition high:

  • Relatively affordable. Nine out of the 10 markets on this list have a median sale price below the national median (with Bridgeport being the exception). 
  • Strong workforce. These markets aren’t affected by tech layoffs like the West Coast. In Connecticut, the biggest industry is insurance, and in Albany, hospitals are the top employer. 

Top Takeaways for Real Estate Agents

Despite some differences across the nation, it’s clear that low inventory and high home prices remain issues. 

Whether your market is cooling or seeing an uptick in bidding wars, your purpose remains the same: help buyers and sellers find opportunities in a challenging market. As we navigate the rest of 2023, stay up to date on market data and continue to evolve and adapt to the ever-changing landscape of the housing market.