24 Housing Markets Lost Value in 2025 — 2026 Will Be Better

lewkmiller / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Home prices fell in two dozen major American housing markets during 2025, but relief appears on the horizon for the housing market in general — at least according to Zillow.

As of October 2025, values declined year-over-year in 24 of the nation’s 50 largest metropolitan areas. Austin, Texas, and Tampa, Florida, tied for the steepest drops at 6.1% each, followed by Miami at 4.8%, Orlando, Florida at 4.6% and Dallas at 4%.

The good news? Zillow forecasts that number will shrink by half in 2026. Just 12 major markets are expected to experience price declines next year as the housing sector stabilizes. Although Zillow didn’t specify the markets, this improvement could mean a turning point for homeowners who watched their property values sink over the past year. 

The Winners and Losers of 2025

While 24 markets lost ground, 26 major metros posted gains during the year ending in October 2025. Cleveland led all markets with a 4.5% annual increase, followed by Hartford, Connecticut at 4.4%, Milwaukee at 4%, Buffalo, New York, at 3.7% and Chicago at 3.7%. 

The geographic pattern reveals clear regional divides. Markets experiencing the steepest declines cluster heavily in the South, particularly in Florida and Texas. These states saw explosive growth during the pandemic as remote workers relocated, driving prices to unsustainable levels.

The correction was inevitable. Austin, Tampa, Miami, Orlando and Dallas all saw massive appreciation from 2020 through 2022. The recent price drops represent a return toward more sustainable valuations rather than a collapse.

Meanwhile, Midwest and Northeast markets that missed out on pandemic-era booms are now posting solid gains. Cleveland, Milwaukee, Buffalo and Chicago benefit from improved affordability attracting buyers who were priced out of coastal markets.

National Picture Looks Stable

The typical U.S. home value reached $357,275 in January 2026, up just 0.1% from the previous year. This near-flat performance nationally masks the wide variations across individual markets.

Monthly changes showed similar splits. Just four of the 50 largest metros posted month-over-month gains in October 2025, led by San Jose and New York at 0.4% each. Meanwhile, 38 major markets experienced monthly declines, with Austin dropping 1%, Pittsburgh falling 0.9% and Dallas declining 0.7%.

Now that we’re in 2026, Zillow projects overall home values will increase 1.2% nationally. This modest growth reflects improving affordability conditions and steady buyer interest across most regions. 

What’s Driving the Recovery?

Several factors explain why fewer markets will experience declining prices in 2026.

Affordability reached a three-year high in October 2025 as mortgage rates eased to 6.25%, the lowest monthly average in over a year. Combined with stable home values, this reduced mortgage payments by 1.8% compared to October 2024. 

If you were putting 20% down on a home, then the median-earning household would spend 32.9% of their income on a mortgage for the typical home, which is the smallest share needed since August 2022. 

The improved affordability sparked renewed activity. Both new listings and pending sales jumped 5% year-over-year in October, defying typical seasonal cooling patterns. Buyers and sellers took advantage of better conditions to complete transactions. 

Inventory recovery also contributes to market stabilization. Total inventory increased 12.8% from the previous year and now sits just 17.3% below pre-pandemic averages for October. This marks the smallest supply deficit since March 2020, when the pandemic began disrupting housing markets. 

Buyer Markets Expand

Competition among buyers cooled significantly during 2025. Zillow’s Market Heat Index shows 19 major markets now favor buyers, up from just nine the previous October. 

These buyer-friendly conditions concentrate in the South but are spreading north and west. Cincinnati; Milwaukee and Birmingham, Alabama, joined the buyer-market list in October as cold weather and rising inventory gave purchasers more negotiating power.

Miami, Indianapolis, Milwaukee, Pittsburgh and New Orleans rank among the strongest buyer markets nationally. Meanwhile, Hartford; San Francisco; New York; San Jose, California; and Providence, Rhode Island retain the strongest advantages for sellers. 

Share This Article: