Seattle homeowners are watching their equity shrink for the first time in years.

The city's median home sale price fell 4.8% year-over-year, the second-largest decline of any major U.S. metro, according to Redfin data published June 25. Only San Jose, California, fell further, at 6.2%. Pending sales in the Seattle metro dropped 12% over the same period.

On a $750,000 home, a 4.8% decline amounts to roughly $36,000. That's meaningful on paper, but at current mortgage rates it barely moves the monthly payment for buyers who couldn't afford the market a year ago.

Seattle's median list price in May was $749,950, according to Realtor.com, still nearly 75% above the national median of $429,500. For renters and lower-income residents in neighborhoods like Ballard and Queen Anne, the correction hasn't yet translated into real affordability.

The numbers confirm a trend building since spring. Active inventory in the Seattle metro rose 39% from a year earlier in April, the largest year-over-year jump among U.S. metros tracked by RE/MAX. Homes sat on the market an average of 37 days in May, up 19.4% from a year ago, according to Realtor.com. Price reductions appeared on 16.7% of active listings.

"Buyers are still buying. They're just no longer willing to overpay," Chris Reis of Pacific Northwest Residences at Compass told Realtor.com.

The high end is moving fastest. Principal broker Leah Courage of The Courage Group at ONE Realty told KIRO Newsradio that luxury listings for homes worth more than $2 million spiked 65% in a single day after Gov. Bob Ferguson signed Senate Bill 6346 into law, while luxury sales were down across the board. Independent listing data for that day was not available to confirm the figure.

SB 6346 imposes a tax on all income over $1 million starting in 2028. The law faces both a court challenge and a recall effort on the November ballot, according to KNKX reporting published Thursday, June 26.

The Seattle-Tacoma-Bellevue luxury market has retained only 29% of its pandemic-era price gains, according to Realtor.com's May 2026 luxury report. The pandemic peak was $2.34 million in April 2023; by May 2026, the figure stood at $2.09 million.

Mortgage rates have held near 6.5% for six consecutive weeks, according to Freddie Mac data for the week ending June 25. That's down from 6.77% a year ago but still high enough to suppress demand. Nationally, home prices hit a record high even as Seattle's fell.

Redfin described the national picture as a buyer's market, with hundreds of thousands more sellers than buyers. In Seattle, that dynamic is playing out against a backdrop of 30,000 downtown jobs lost since 2020 and a 48% decline in office building taxable value, per a Downtown Seattle Association analysis reported by GeekWire in June 2026.

Washington's next revenue forecasts are due in September and November. Gov. Ferguson said Thursday, June 26, he would not propose new taxes. His budget proposal is expected in December. The SB 6346 court challenge and November ballot recall could reshape the luxury market before the tax takes effect in 2028.

No neighborhood-level price data for Ballard, Queen Anne, or Magnolia was available in the Redfin or Realtor.com reports. Residents can request disaggregated data through the Northwest Multiple Listing Service or via public records requests under RCW 42.56.