That could help revive a relatively anemic home-shopping season, which recently saw a steep decline in pending sales, meaning fewer purchase contracts were signed.

“But the tide is starting to turn for homebuyers,” Redfin said in an update on Thursday.

While the median U.S. home-sale price was up 1.9% year over year in the four weeks that ended May 25, prices in 11 of the 50 most populous U.S. metro areas are falling, according to Redfin data. They’re led by Oakland, Calif. (-4.9%); Dallas (-4.5%); Jacksonville, Fla. (-3%); Austin (-2.5%); and Seattle (-1.4%).

That comes ahead of what’s expected to be a broader trend later this year. Redfin sees the median U.S. sale price going flat in the third quarter on an annual basis, then falling 1% year over year by the fourth quarter—even with mortgage rates seen hovering around 7%.

It would mark a sharp reversal from earlier this year and recent history. In the first quarter, prices rose 3%, and second-quarter prices are expected to be up 2%. Meanwhile, prices have been rising since 2012, except for a blip in 2023, amid a prolonged seller’s market.  

The reason for the U-turn is simple: There is way more supply than demand right now. Last month, there were about 500,000 more people selling homes than there were people trying to buy them, marking the biggest such gap since Redfin started collecting the data in 2013.

And when those home sellers list their properties, they’re staying on the market longer, forcing some to lower their asking prices.

“Sellers are realizing we’re in a new market, which is making them flexible,” Venus Martinez, a Redfin agent in Los Angeles, said in the report. “A lot of sellers, especially those who may have bought at the top of the market and need to sell, are willing to accept less money for their homes, give concessions to buyers, and even negotiate commissions. Buyers are more likely to be able to negotiate if a home has been on the market for more than a few weeks, or if it has fallen out of contract.”

While mortgage rates will likely remain high, Redfin noted that wages will continue rising, meaning that home affordability should still improve in the second half of the year.

Redfin’s forecast follows a similar one from Zillow in April, when it predicted home values will fall 1.9% this year after previously anticipating a 0.6% increase.

“The combination of rising available listings and elevated mortgage rates is signaling potential price drops by year’s end,” Zillow researchers wrote. “With increased supply, buyers are gaining more options and time to decide, while sellers are cutting prices at record levels to attract bids.”

Of course, if buyers start to flood the market, then the pricing landscape will change with it. On the other hand, a prolonged slump in activity is also typically bad news for the overall economy.

Analysts at Citi Research warned in a note last week that residential investment, a leading indicator for a recession, is set to contract this quarter after growing weakly in the first quarter as high mortgage rates take a toll.

“Residential fixed investment is the most interest rate sensitive sector in the economy and is now signaling that mortgage rates around 7% are too high to sustain an expansion,” Citi said.