That's how it should work, but I have yet to see any prices dropping
Because many/most people seem to just roll over and pay up any higher price. Some blame it on "inflation" now but it's been "supply chain issues", "war", "covid demands", etc recently. There's always plenty of reasons spun for RAISING prices vs. just saying we "want another record revenue quarter and can get away with charging more."
I strongly suspect the bulk of consumers have FORGOTTEN about the power of NO... the easy money, easy credit, easy payments, etc have trained us to find a way to buy anything we want or barely want... and we FORGOT to see our hard-earned money as just as valuable... just as desired by the sellers of the stuff.
So you won't see many prices dropping until people either re-learn to say NO or are forced there by price hikes going just too high where the masses are forced into saying NO. As soon as demand is pinched enough, prices will start falling to try to find a level to get us parting with dollars for stuff again. Until then- while the masses will pay anything- expect prices to simply roar higher and higher.
Only a few months ago, homes where I am were getting day 1 offers for full ask... even getting bid up above ask. Prices of homes are bid up to ridiculous levels here. With the cost of credit rising, payments for enormous mortgages are going up and thus demand is rapidly falling. Now it's taking much longer to get ONE offer and that offer is almost certainly going to be considerably BELOW ask.
What's happening? Do buyers not know about "Inflation! Inflation! Inflation!"
They know... but home demand has taken a big plunge and ask prices that were to-the-moon just a few months ago are now following the bids down trying to find LOWER levels where buyers will trade cash for homes again.
The same works for ANYTHING consumers buy... if enough decide that current pricing is too high for whatever it is.