The U.S. housing market has cooled this year as mortgage rates surge and record home-price appreciation sidelines more buyers.

And economists now expect this slowdown to result in lower prices in nearly half of markets across the country next year.

“While we think national home prices will likely avoid a correction in 2023, we expect 39% of metropolitan areas to experience price declines,” analysts from Goldman Sachs’ Global Investment Research wrote in a report this week.

Goldman expects Western markets like Denver, Phoenix, and Los Angeles to experience some of the sharpest declines in home prices next year. East Coast markets like New York, Philly, and Boston should all see home prices continue to appreciate, in Goldman's view.

"In recent months, 9% of active listings have cut prices per Zillow; these price cuts have been most common in metros that saw a sharp run-up through 2020 and 2021, and may be a sign of further weakness to come," Goldman said. "We view South/Southeast metros as likely better positioned than West metros, supported by strong demographic trends and more favorable affordability on an absolute basis."

During the pandemic, sellers had the upper hand as buyers competed for a limited pool of home listings, particularly in cities that benefitted from both remote work trends and a push from buyers flush with cash searching for second homes.

In Boise, Idaho, for example, n​early 70% of homes for sale in that city had a price drop in July as buyers dropped out of the market, data from online brokerage Redfin showed last month.

And it seems most places investors or homebuyers look, prices appear are starting to cool.

Home prices dropped 0.77% from June to July, according to Black Knight's latest Mortgage Monitor Report, the largest monthly decline since January 2011.

“Looking across geographies, a tenth of metros experienced month-over-month declines in home values in July, concentrated in the West and Mountain West regions,” the report noted.