Fastest-Cooling Housing Markets in the U.S.

The U.S. housing market changed sharply toward the end of 2022, especially in cities where prices had climbed quickly during the pandemic years. While many areas previously experienced intense buyer demand, rising mortgage rates and already-high home prices made affordability a major challenge for would-be homeowners.

Markets in the western half of the United States were hit particularly hard. Some cities may simply be experiencing a price correction after several overheated years, but it remains unclear how long the slowdown will last. Based on Redfin’s September 2022 housing market report, these are the fastest-cooling housing markets heading into 2023.

10. San Francisco, California

Median listing price: $1.62 million

Median listing prices are based on Redfin’s September 2022 housing market report.

Bottom Line: San Francisco, California

San Francisco remains one of the most expensive housing markets in the country, and affordability has become a serious obstacle for buyers. The city’s high cost of living, combined with concerns about crime and quality of life, has encouraged many residents to consider moving elsewhere.

Mortgage rates nearly doubled in 2022, making already-pricey homes even harder to purchase. Remote work also reduced the need for many tech employees to live close to offices in the Bay Area. As a result, some buyers and homeowners left for more affordable markets in states such as Texas, New Mexico and Montana. By the summer of 2022, San Francisco saw one of the largest outflows of residents among major U.S. metro areas.

9. Tacoma, Washington

Median listing price: $575,000

Bottom Line: Tacoma, Washington

Tacoma’s housing market cooled as higher interest rates pushed many buyers to the sidelines. Home prices and sales both declined in 2022, and a notable share of buyers backed out of purchase agreements during the summer.

The number of homes sold fell significantly compared with 2021, dropping by about 35 percent. Properties also began taking much longer to sell, with many listings staying on the market roughly twice as long as they had the previous year. For sellers, that meant fewer bidding wars and more pressure to adjust expectations.

8. San Diego, California

Median listing price: $875,000

Bottom Line: San Diego, California

San Diego has long been desirable for its weather, coastline and lifestyle, but high home prices have made it difficult for many buyers to enter the market. In 2022, home sales declined by nearly 35 percent compared with the previous year.

Homes that did go up for sale also spent much more time on the market than they did during the hotter conditions of 2021. Some people who wanted to remain close to the San Diego lifestyle but could not afford local prices moved south to Mexico, including areas around Tijuana. This shift reflects how affordability pressures can push buyers beyond traditional local boundaries.

7. Denver, Colorado

Median listing price: $612,000

Bottom Line: Denver, Colorado

Denver was a strong seller’s market for several years, supported by population growth and high demand. By late 2022, however, rising interest rates changed the balance. Buyers became more cautious, took longer to make offers and looked more aggressively for price reductions.

Inventory increased across the Denver area, giving buyers more choices than they had seen in roughly two years. While the city remained attractive, the combination of higher borrowing costs and elevated prices slowed the pace of home sales.

6. Boise, Idaho

Median listing price: $550,000

Bottom Line: Boise, Idaho

Boise became a popular destination during the pandemic for people leaving larger and more expensive metro areas. That surge in demand helped push home prices higher, but by the end of 2022 the market had cooled dramatically.

New listings began outpacing sales, creating a much different environment from the frenzied conditions seen earlier. With fewer buyers willing or able to pay high prices at higher mortgage rates, Boise shifted from one of the nation’s hottest pandemic markets to one of its fastest-cooling real estate markets.

5. Stockton, California

Median listing price: $576,000

Bottom Line: Stockton, California

Stockton gained momentum early in the pandemic as some buyers searched for more affordable options within reach of the Bay Area. But like many California housing markets, Stockton began to slow as mortgage rates rose and buyer budgets tightened.

Homes started staying on the market longer, and prices softened compared with the rapid growth of prior years. The city also faces challenges that weigh on demand, including a high crime rate, homelessness concerns, budget strain and elevated unemployment. For residents who commute to the Bay Area, high gas prices add another affordability concern.

4. Seattle, Washington

Median listing price: $850,000

Bottom Line: Seattle, Washington

Seattle’s housing market cooled quickly as inflation and higher borrowing costs squeezed buyers. The city had already been expensive for years, partly due to strong demand from tech workers and high-paying jobs.

During the early stages of the pandemic, Seattle still attracted new residents and buyers. But as mortgage rates rose and economic uncertainty increased, sales activity slowed considerably. Buyers gained more leverage, while sellers had to adjust to a market with less urgency and fewer competing offers.

3. Oakland, California

Median listing price: $1.07 million

Bottom Line: Oakland, California

Oakland is another Northern California market where affordability has become a major barrier. As interest rates climbed, fewer buyers were able to compete for homes priced above $1 million.

Among Bay Area cities, Oakland experienced significant real estate price growth. The median price was about $850,000 in 2020, rose to $950,000 in 2021 and moved above $1 million by 2022. With prices at those levels, many potential buyers simply could not make the numbers work, leading to softer demand and slower sales.

2. Sacramento, California

Median listing price: $610,000

Bottom Line: Sacramento, California

Sacramento was once a top choice for Bay Area residents seeking more affordable homes. That popularity pushed prices higher, but rising interest rates eventually slowed the market.

By November 2022, the Sacramento area recorded the lowest number of November home sales in 20 years. Local appraiser and housing analyst Ryan Lundquist described the market as worse than 2007. Median home prices in the area also slipped by about $75,000, showing how quickly conditions had changed from the earlier boom.

1. San Jose, California

Median listing price: $1.56 million

Bottom Line: San Jose, California

San Jose ranked as the fastest-cooling housing market on this list. Buyer demand dropped faster here than in any other California city included in the report, largely because prices were already extremely high before mortgage rates surged.

Home supply increased sharply as fewer buyers moved forward with purchases. In recent years, supply in the area had been around 10 percent, but it rose to 43 percent as demand weakened. That shift led to more price reductions, less competition and a noticeable cooling across the San Jose real estate market.