Home prices are beginning to decline, unsold inventory is piling up at levels not seen since the 2008 crash, and buyers — from first-timers to luxury clients — are either backing out of deals or demanding steep discounts.

With mortgage rates hovering near 7% and economic uncertainty fueled by trade tensions, many buyers are hesitating. The balance of power is shifting. Sellers are now making concessions in a market that once saw bidding wars and all-cash offers.

According to the S&P CoreLogic Case-Shiller index, home prices in the 20 largest U.S. metro areas dropped by 0.12% in March compared to the previous month. While modest, the decline signals the end of the consistent price growth seen since January 2023.

The more significant trend is in supply. In April, unsold completed new single-family homes reached 117,000 — the highest number since July 2009 — marking a 31% increase from a year earlier. Homebuilders are becoming increasingly wary about future demand.

Luxury real estate is also feeling the slowdown. Redfin reports a 10% year-over-year drop in luxury home sales in April — the sharpest decline since 2023. Even wealthy buyers with cash or jumbo loans are retreating, indicating growing caution among the top 5% of earners. Roughly $7 trillion is currently sitting in money-market accounts instead of being invested in assets like real estate or stocks.

For buyers, this means more negotiating power. Nearly half of sellers are offering concessions, according to Redfin, and inventory is at its highest since September 2020.

Regionally, Texas leads the market correction. In April, listings there hit 123,000 — 53% above normal — making it the fourth most oversupplied market in the country. In Austin, home prices have fallen 20.4% from pandemic peaks — the steepest drop of any major metro.

Florida is also under pressure. Cities like Tampa and Jacksonville rank high on lists of markets with the most price cuts. Even California’s Bay Area, often viewed as recession-resistant, is softening. In March, 1,300 new homes were listed in the San Francisco area, but only 780 went pending — the largest March gap since at least 2012, per Redfin.

This turning point isn’t just about affordability. While 7% mortgage rates are a factor, buyer confidence is also slipping. According to Citi Research, housing activity is poised to contract — a potential warning sign of a coming recession. They note that residential investment is “the most interest rate sensitive sector in the economy.”

Are you ready for a potential correction in the market?