Home prices are falling in these cities, as high mortgage rates weigh on buyers. Nearly a quarter of listings on Zillow had a price cut, company says.

Home Prices Are Falling in These Cities, as High Mortgage Rates Weigh on Buyers — Nearly a Quarter of Listings on Zillow Had a Price Cut, Company Says

By Steven Orlowski, CFP, CNPR

April 18, 2025

Homebuyers across the country are facing a tough market — not because prices are soaring, but because borrowing costs remain painfully high. The combination of elevated mortgage rates and economic uncertainty is putting pressure on sellers to slash their asking prices, especially in some of the nation’s previously red-hot housing markets.

According to recent data from Zillow, nearly 24% of home listings across the U.S. had a price cut in March — a sharp increase from earlier this year and a clear sign that sellers are struggling to meet buyers where they are. This growing trend of price reductions is most visible in a handful of metro areas where home values rose steeply during the pandemic-fueled real estate boom but are now adjusting to a cooler market climate.

Cities Seeing the Biggest Price Cuts

Several cities stand out for their volume of markdowns. These include:

• Austin, Texas
  Once a darling of the pandemic migration wave, Austin’s housing market has been cooling for over a year. Nearly 34% of listings saw price cuts in March as demand slowed amid high interest rates.

• Phoenix, Arizona
  Another pandemic hotspot, Phoenix has seen a similar trend, with 32% of listings marked down — many of them new builds in sprawling suburban developments.

• Las Vegas, Nevada
  With 31% of listings dropping in price, Las Vegas reflects the broader slowdown in markets that previously attracted remote workers and investors in droves.

• Boise, Idaho
  Boise saw explosive price growth during the early 2020s, but the market has since retreated. About 30% of homes on the market there have been marked down.

Mortgage Rates Remain a Major Drag

The 30-year fixed mortgage rate has hovered around 6.9% to 7.2% for much of early 2025 — more than double the rates many homeowners locked in during the pandemic. For prospective buyers, this makes a significant difference in monthly payments and overall affordability.

"High mortgage rates are the biggest challenge facing buyers today," said Skylar Olsen, chief economist at Zillow. "As affordability worsens, sellers are having to adjust expectations."

Indeed, while home prices in some cities are declining, the national median sale price is still historically high — meaning the combination of elevated prices and interest rates is keeping many would-be buyers on the sidelines.

A More Balanced Market?

While falling prices can be unsettling for sellers, the shift may offer opportunities for buyers who were previously priced out of competitive markets. Experts say this could signal the beginning of a more balanced housing environment after years of extreme volatility.

“Price reductions are not necessarily a sign of a housing crash,” said Danielle Hale, chief economist at Realtor.com. “They suggest that sellers are beginning to respond to changing market dynamics.”

However, affordability remains a significant concern. In many cities, even with price cuts, monthly payments are still higher than during the peak of the market frenzy due to interest rates.

Looking Ahead

As the Federal Reserve weighs its next moves on interest rates, the housing market is expected to remain in flux through mid-2025. Most economists agree that sustained relief will only come when mortgage rates begin to fall more substantially — a shift that may hinge on broader economic indicators such as inflation, employment, and GDP growth.

For now, buyers willing to weather higher rates may find better deals — especially in cooling markets like Austin, Phoenix, and Boise. Sellers, on the other hand, may need to continue adjusting expectations as the market recalibrates from its pandemic-era highs.