List Prices Just Dropped at the Fastest Annual Pace Since 2017

List prices just posted their steepest annual drop since 2017. If you have buyers who’ve been sitting on the sidelines, this is a data point that gives you a reason to pick up the phone.

According to Realtor.com’s May 2026 Monthly Housing Trends Report, the national median list price fell 2.4% year over year to $429,500 in May. That’s the seventh consecutive month of annual price declines and the largest in Realtor.com’s data going back to 2017. Price per square foot fell 2.5% year over year, also a record in the series.

As Realtor.com Chief Economist Danielle Hale put it,

“Higher rates and geopolitical uncertainty could have sidelined both buyers and sellers this spring. Instead, we’ve seen six months of sellers adjusting their expectations and buyers rewarding them for it. List prices are down at a record pace, but price reductions are also down. 

“That combination tells you sellers are doing their homework before listing, not after. The market is finding a new equilibrium.”

Here’s a closer look at what the May numbers are actually showing, and what this means for your conversations with local buyers. 

Are Sellers Finally Pricing Realistically?

List prices have now fallen year over year for seven consecutive months. The 2.4% annual decline in May brought the national median to $429,500, and price per square foot dropped 2.5% year over year to $228 per square foot. 

Here’s what makes this report different from the typical “prices are falling” story: price reductions are going down.

The share of active listings with a price cut fell 1.6 percentage points year over year to 17.5% in May. In a distressed market, sellers list high and get forced to cut. But May data shows that more sellers were pricing to current conditions from day one instead of testing the market and retreating.

Realtor.com Senior Economist Jake Krimmel stated:

“In a crashing market, sellers list optimistically and get forced to cut. What we’re seeing is different in a key way: sellers are using current market conditions as price discovery from the start, pricing for current conditions rather than selling under distress. That combination tells you sellers have internalized the more buyer-friendly conditions and are adjusting price expectations before listing rather than after. This is a meaningful behavioral shift, and it’s precisely why buyers are still showing up despite rates above 6.5%.”

Are More Buyers Going Under Contract?

Yes. Pending sales rose 4.3% year over year in May, extending a streak to six consecutive months of annual growth, while contract signings climbed 3.5% year over year.

The last time the market strung together that kind of run in pending sales was January through June 2021.

The falling list prices and rising pending sales aren’t contradicting each other. They’re the same story from two angles: sellers are meeting buyers where they are, and buyers are responding.

What’s Happening with Inventory?

The most consequential development in May was a listing supply reversal in two parts of the country that have been locked up for years.

New listings surged in the Northeast and Midwest while the South and West stalled:

• Northeast new listings: +8.6% YoY; active listings +7.1% YoY
• Midwest new listings: +4.7% YoY; active listings +8.2% YoY
• South new listings: +0.6% YoY; active listings +0.3% YoY
• West new listings: -1.4% YoY; active listings +1.4% YoY

Just two months ago, new listings in the Northeast were declining. The fact they’re now running nearly 9% ahead of last year points to the lock-in effect loosening in markets where buyers have needed relief the most. Homeowners who’ve been sitting on low-rate mortgages with little incentive to list are starting to move.

Of course, this is something to continue watching. As Krimmel pointed out:

“It’s too early to declare the spring market has fully weathered the storm, but the leading indicators are holding. Cancellations are low, new listings are growing, and sellers are cutting prices less even as list prices fall. 

“The variables to watch in June are whether the Northeast and Midwest momentum holds and whether that macro pressure in the South and West starts showing up in cancellation data. 

“Those are the early warning signs. So far, we’re not seeing them.”

What Does this Mean for Buyers Who’ve Been Waiting?

This is the conversation to have this week. How many of your buyers know list prices are at their lowest annual reading since 2017? 

If you’ve got buyers who’ve been sitting on the sidelines waiting for the market to shift, this is the data that gives you a reason to reach back out. 

Here’s an opening line from AI Script Advisor in BAMx to get that conversation started:

“Hey, quick question. You mentioned waiting for prices to drop. Can I share something that actually surprised me this week? List prices just hit their lowest annual reading since 2017. Sellers are already pricing correctly before they list. And pending sales have been climbing for six straight months. So the window you’ve been waiting for? It may already be open. What would need to be true for you to feel ready to move?”

Or, if you want to keep it simpler:

“What would prices need to do for you to feel like the timing was right?”

Two things to watch in June

Realtor.com’s economists flagged two indicators worth tracking: 

1. Contract cancellations 
2. Whether the Northeast and Midwest inventory surge holds 

May and June 2025 were when tariff-driven uncertainty started bleeding through into actual transaction behavior — cancellations increased and sellers pulled listings. So far in 2026, cancellations are running below the levels of recent years. That’s a good sign. But the South and West are showing early signs of softening, and if those trends start showing up in cancellation data, that’s the early warning sign to watch.

For now, the leading indicators are holding. And your buyers who’ve been waiting have data to work with.