(The Center Square) – Denver was one of a handful of cities across the country where at least 40 percent of homes listed for sale experienced price reductions in May, according to REALTOR Magazine.

The price reductions come as some anticipate an overall housing market slowdown, reported the magazine, which used data from Redfin. High average interest rates and double-digit annual home price appreciations are continuing to keep many homebuyers out of the market.

“Sellers could do no wrong over the past two years and have become overconfident,” James McGrath, a New York-based real estate broker, told the magazine. “They could take the price their neighbor just got, bump it up 5 percent and still have a line out the door. But with the surge in mortgage rates, those days are over.” 

Other cities such as Salt Lake City, Utah, Sacramento, Calif., and Boise, Idaho also saw at least 40 percent of their homes take a price cut in the ranking. 

Despite the price drops, Denver continues to rank high among other cities in terms of overall price appreciation. According to the May 2022 CoreLogic U.S. Home Price Insights report, home prices in Denver grew by 21.7 percent over the last 12 months, ranking it fifth among the top-10 metro areas. 

For comparison, Phoenix, Ariz. led the way with a nearly 30 percent annual price appreciation compared to the national average of 20.9 percent. 

“The record growth in home prices is a result of a scarcity of for-sale inventory coupled with eager buyers who want to purchase before mortgage rates go higher,” said Patrick Dodd, CEO of CoreLogic.

One reason why many metros are seeing home price reductions is that mortgage rates continue to squeeze homebuyer budgets. According to data from the National Association of Realtors (NAR), the average interest rate on a 30-year fixed mortgage is 5.78 percent compared to the 2.93 percent rate recorded a year ago. 

The higher interest rates have also helped increase the average monthly home payments for many homebuyers. For example, the average monthly payment for a $300,000 mortgage is now over $1,800 per month now compared to around $1,265 last year, according to Lawrence Yun, NAR’s chief economist.