There’s still a nationwide shortage of homes — so why are sellers getting desperate in some places?

For years, Americans have heard this mantra: There isn’t enough housing in the United States. The ongoing shortage explains why affordability is such a challenge, and why so many Americans are spending their 30s as renters rather than homeowners.

The reality has grown a bit more complicated.

As the housing market cools, a new narrative is emerging. Home prices now are falling in half of the nation’s 20 largest metro areas, according to the most recent Case-Shiller housing index. Builders are so desperate to sell new homes in Texas and Florida that they’re subsidizing mortgage rates as low as 0.99%. Discouraged home sellers are yanking the for-sale signs out of their front yards.

If you’re a frustrated would-be homebuyer or a potential seller, you’d be reasonable to wonder what gives? Is there a housing shortage or are there too many houses? The answer is yes to both, with some nuance.

The long-term nationwide shortage of homes remains firmly in place. At the same time, local gluts of homes for sale are a reality. If you’re buying or selling a home in the near future, this shift will shape your experience. For buyers in some markets, trends have suddenly shifted in your favor —...