Home prices are dropping in half of the nation’s largest markets, according to new data, raising concerns of a looming downturn in the U.S. housing sector.
A new report from Zillow shows that sellers across the country are cutting prices at record levels, reflecting the challenges of high mortgage rates, inflation and economic uncertainty.
27.4 percent of all listings had a price cut in July, the highest level since Zillow began tracking the metric in 2018.
The pace of reductions helped push year-over-year home values lower in 25 of the 50 largest U.S. metropolitan areas.
The majority of these price drops are occurring in the South and the West, regions that saw rapid growth during the pandemic-era housing boom.
Florida and Texas have emerged as leading examples of markets shifting from expansion to correction.
Tampa home prices dropped 6.2 percent, Austin declined 6 percent, Miami fell 4.6 percent, Orlando decreased 4.3 percent and Dallas dropped 3.9 percent, according to Zillow.
“Metros where price corrections are steepest are among those with the largest increase in inventory compared to before the pandemic,” said Kara Ng, senior economist at Zillow.
Builders in southern and western markets responded quickly when pandemic demand surged, largely because of fewer land-use restrictions.
That fast pace of construction produced significant inventory, and now supply in some markets is outpacing demand.
Zillow’s analysis shows that four of the top five metros for annual price drops—Tampa, Austin, Orlando and Dallas—were also among the top regions for home-building permits between 2020 and 2024.
Miami was the only exception.
The oversupply is leaving sellers in a weaker position.
As more homes flood the market, buyers are hesitant to purchase amid economic volatility and elevated borrowing costs, forcing price reductions.
In Florida, the situation is compounded by rising insurance premiums and a worsening condo crisis, driven by risks associated with hurricanes and other natural disasters.
Many homeowners are struggling to offload properties despite slashing listing prices.
Zillow reported that price cuts are especially prevalent across the South and the Mountain West.
Homeowners in those regions are increasingly resorting to lowering prices to attract buyers, underscoring the shift from pandemic-era bidding wars to today’s slower market conditions.
Some buyers are beginning to see modest improvements in affordability.
Price declines are softening the financial barriers that intensified during the pandemic surge in housing values. However, affordability remains a challenge in high-cost areas such as San Francisco and San Diego, where steep borrowing costs continue to limit access for middle-income households.
More affluent buyers are in a stronger position, the Daily Mail outlined.
With many potential competitors leaving the market due to higher mortgage rates, wealthier households face less competition and more leverage when negotiating home purchases.
Despite the declines in southern and western markets, housing values are rising in other regions of the country.
Zillow reported that home prices increased in 25 major metros over the past year, particularly in the Midwest and Northeast.
“Demand is high — especially in affordable areas — but building restrictions put a damper on new and higher-density projects,” Ng said.
“Sellers have few options to move up to, and existing inventory is still below pre-pandemic averages in many metros.”
Cleveland, Ohio, recorded the nation’s largest increase in home values, with prices rising 4.7 percent year-over-year in July.
Hartford, Connecticut, followed with a 4.5 percent increase.
Louisville, Kentucky, reported a 3.9 percent gain, Detroit rose 3.8 percent, and Buffalo, New York, saw prices climb 3.7 percent.
While these gains show some markets are still experiencing growth, they remain modest compared to the double-digit spikes in values that occurred during 2020 and 2021.
At the height of the pandemic, limited inventory and surging demand drove annual appreciation above 10 percent in many cities.
The recent slowdown reflects broader caution in the housing sector.
The Daily Mail noted that earlier this year, Zillow reversed its national forecast, signaling that the overall U.S. housing market is poised for a decline.
In May, Zillow economists projected that home values nationwide would fall by 0.9 percent between April 2025 and April 2026.
If accurate, it would mark the first nationwide decline in housing prices since 2011.
This represents a sharp change from the company’s prior forecast, which had predicted U.S. home values would rise 2.9 percent this year.
The post Housing Market Shakeup: Half of Major U.S. Cities See Falling Prices as Sellers Slash Listings, New Zillow Report Reveals appeared first on Resist the Mainstream.
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Author: Jordyn M.
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