10 Cities with the Best Home Buying Deals This Summer

New data reveals prices are retreating fastest in pandemic-era home buying hotspots.

house key exchange during home buying process
(Image credit: Getty Images)

This spring, home buying season brought a surprising milestone, as annual home list prices went negative for the first time in years. Home prices are actually falling on average across the country, but some buyers are getting more significant relief than others.

Home buying deals hit the most overheated markets

A new report from Realtor.com shows that last month, sellers across the country listed their homes below last May's price benchmarks. Rising mortgage rates had been steadily pressuring homebuyers to pull back, and eventually, home sellers had to blink on their asking prices too. 

A national price drop hadn't happened for years, and the report's data suggests overall prices won't be rising again soon. 

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Below the national top line, the report uncovers the top cities where homebuyers are seeing the most significant price drops. The list of metros includes Southern and Western hotspots where prices skyrocketed as people, particularly those capable of remote work, decamped from major U.S. cities in search of more space and affordability during the COVID-19 pandemic.

For most of the metros on the list, excess demand over the past few years gave way to new home construction that in turn relieved upward pressure on prices. There are several exceptions across more affordable Midwestern metros that buck the national trend with prices that are rising steadily, albeit from a much lower starting baseline.

Realtor.com indexed the median price per square foot in the 100 largest metro areas and compared median prices for May 2023 against May 2022. They also selected only one metro per U.S. state to provide geographical diversity. 

Swipe to scroll horizontally
10 Metros with the Best Home Buying Deals in May
Metro AreaMedian Listing PriceMedian Listing Price per Sq Ft ($)YOY % Change in Price per Sq Ft
1) Boise, ID$609,875$282-7.8%
2) Austin, TX$583,751$276-7.7%
3) Myrtle Beach, SC$366,075$225-7.3%
4) Phoenix, AZ$529,450$274-5.6%
5) Sarasota, FL$549,900$305-4.7%
6) Salt Lake City, UT$635,000$247-4.0%
7) Pittsburgh, PA$238,250$152-3.9%
8) Winston-Salem, NC$345,899$148-3.6%
9) Sacramento, CA$662,875$340-3.4%
10) Chicago, IL$376,000$205-1.1%

These surprising price drops are likely just the beginning for these hot markets. Moody's Analytics chief economist Mark Zandi told Realtor.com, "I’d be surprised if we don’t have this same conversation a year from now and prices aren’t another 3% or 4% lower than where they are today."

I’d be surprised if we don’t have this same conversation a year from now and prices aren’t another 3% or 4% lower than where they are today.

Mark Zandi, Moody's chief economist

Money-smart home buying strategies

On top of using the data in the report to guide your home search for affordable metro areas, consider the following tips to reduce your home buying costs.

Take advantage of the Fed pause

This week, the Federal Reserve boosted homebuyers by announcing a pause to raising the federal funds rate. This will finally stop the relentless upward march of mortgage rates, at least for the next month. Mortgage application volume increased by 7.2% last week, after a four-week decline, likely in anticipation of the Fed's heavily forecast rate pause. Use our mortgage calculator tool to compare lenders and find the best rate for you.

Grab homebuyer tax breaks

The government offers many tax breaks for homebuyers. You can fully deduct from your taxes any points you buy on your primary home mortgage. Savers with traditional or Roth IRAs can withdraw up to $10,000 to build or buy a new home, without paying the 10% withdrawal penalty. You can also deduct interest on up to $750,000 of mortgage debt, provided you itemize your taxes.

Consider a 1031 exchange

If you're trying to buy a new home to use for a business or hold for an investment, you can make use of the drop and swap 1031 exchange. The IRS allows real estate investors to swap one property for another of the same type or "like-kind"  while deferring capital gains taxes indefinitely, if used correctly. This type of legal swap can be an extremely cost-effective way to upgrade your real estate portfolio. Just be sure to follow the 1031 exchange rules to avoid hefty tax penalties.

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Ben Demers
Audience Engagement Manager, Kiplinger.com

Ben Demers manages digital content and engagement at Kiplinger, informing readers through a range of personal finance articles, e-newsletters, social media, syndicated content, and videos. He is passionate about helping people lead their best lives through sound financial behavior, particularly saving money at home and avoiding scams and identity theft. Ben graduated with an M.P.S. from Georgetown University and a B.A. from Vassar College. He joined Kiplinger in May 2017.