Buyers catch a break: Home prices just fell the most in 2 years

• Home prices are being cut at the fastest pace in two years.
• The share of home listings that saw a price cut rose to 18.9% in July, up 3.4% from last year.
• Demand is cooling as buyers wait for mortgage rates to ease, Realtor.com said.

Homebuyers are finally starting to see the housing market shift in their favor , with home prices being slashed at the fastest pace in two years, according to Realtor.com.

The share of available listings that saw a price cut in July rose to 18.9%, up 3.4% compared with levels recorded in July last year. Those cuts have helped push down home prices across the country, with the median US home price dropping from $445,000 to $439,950 last month, the real-estate-listings site said in a recent report .

Price cuts have largely been driven by lower demand, alleviating some of the imbalances that pushed prices to record highs over the past year.

"First, rates remain higher than expected, which means there is less buyer activity," Ralph McLaughlin, a senior economist at Realtor.com, said in a statement. "Second, the prospect of lower mortgage rates coming this fall may have induced some buyers to wait. This combo has led sellers to lower their prices in order to attract more buyers."

The 30-year fixed mortgage rate dipped slightly last week, hovering around 6.7%. Buyers, though, are expecting rates to cool even more, especially as the Fed looks poised to cut interest rates in September.

Among the metro areas tracked by Realtor.com, 47 out of 50 saw the share of homes with price cuts increase year over year.

Cities in the Sun Belt appeared to dominate in the overall share of price cuts. Tampa, Florida, had the largest increase in price reductions over the past year, with 9.7% of homes on the market getting a cut in July. It was followed by Charlotte, North Carolina, and Phoenix, where 9.5% and 9.4% of homes on the market got a price cut, respectively.

"These are places where sellers have had a good run over the past few years with rising prices, but with the effects of higher rates fully settling in, sellers are having to come back down to earth with their price expectations," McLaughlin added.

Some real-estate commentators are calling for a more extreme price drop in the Sun Belt, given the steep increases in the region during the pandemic. Metros in the area could see as much as a 15% drop in home prices, one forecaster previously told Business Insider, pointing to signs that supply in the region was on track to start outpacing demand.