Thermostatically controlled loads (TCLs) have shown great potential for demand response (DR) in electric grid operations. However, it has been commonly seen that DR events using TCLs may cause load synchronization and unwanted oscillatory effects, especially in homogeneous populations. In an attempt to mitigate the negative impacts of DR events, a decentralized method is proposed that modifies each thermostat behavior based on the activity of a small number of nearby TCLs. This feedback introduces the possibility of instability in the aggregate behavior. A stability analysis is performed on a linearized model of the aggregate system and the results of that analysis compared to simulation results. The proposed modification of thermostat behavior results in fourfold reduction in the post-DR peak while suppressing ensuing oscillations at the expense of a modest increase in compressor cycling. The linearized model also provides insight into the aggregate behavior of the population.