These 42 housing markets are seeing falling home prices

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These 42 housing markets are seeing falling home prices

National home prices rose +2.1% year-over-year from February 2024 to February 2025, according to the Zillow Home Value Index. That’s a deceleration from the +4.6% year-over-year rate last spring. However, not every housing market is seeing rising home prices.

Among the 300 largest metro area housing markets, 42 markets are seeing falling home prices on a year-over-year basis. That’s up from last month when just 31 of the nation’s 300 largest metro area housing markets had falling year-over-year home prices.

While home prices continue to rise in regions with tight inventory—such as much of the Northeast and Midwest—some housing markets in states like Texas, Florida, and Louisiana, where inventory has now surpassed pre-pandemic 2019 levels, are experiencing modest price corrections.

These year-over-year declines are evident in major metros such as Austin (-3.8%); Tampa (-3.6%); San Antonio (-2.0%); New Orleans (-1.7%); Phoenix (-1.6%); Jacksonville, Florida (-1.5%); Dallas (-1.4%); and Orlando (-1.4%).

The states with the most metro areas seeing year-over-year home price declines:

Florida —> 20 of the 42 markets

Texas —> 9 of the 42 markets

Louisiana —> 4 of the 42 markets

Arizona —> 3 of the 42 markets

Colorado —> 3 of the 42 markets

The markets seeing the most softness, where homebuyers are gaining the most leverage, are primarily located in Sun Belt regions, particularly the Gulf region and Mountain West region. These areas saw major price surges during the Pandemic Housing Boom, with home price growth outpacing local income levels. As pandemic-driven migration slowed and mortgage rates rose, markets like Tampa and Austin faced challenges, relying on local income levels to support frothy home prices.

The housing market softening in these areas was further accelerated by the abundance of new home supply in the pipeline across the Sun Belt. Builders in these regions are often willing to reduce net effective prices or make other affordability adjustments to maintain sales. These adjustments in the new construction market then create a cooling effect on the resale market, as some buyers who might have opted for an existing home shift their focus to new homes where deals are available.

Will this softening continue or spread this year? A key indicator to watch will be active inventory levels. If weaker markets like Tampa continue to see substantial increases in active inventory—it’s already above pre-pandemic levels in that market—it may signal ongoing softening, potentially creating more opportunities for homebuyers.

Tariffs jolt markets

On Wednesday, President Donald Trump announced a set of tariffs during a White House Rose Garden ceremony, referring to the day as "Liberation Day." The new tariff structure includes a baseline 10% tariff on imports into the U.S., effective April 5, 2025. Additionally, higher tariffs targeting specific countries will take effect on April 9, 2025.

That news saw the S&P 500 Index fall -4.8% on Thursday. Bond prices rose, and long-term yields, including the average 30-year fixed mortgage rate (which hit a 4-month low of 6.63% on Thursday), fall.

The reason? Many traders believe that higher tariffs will create a shock that compresses corporate earnings and slows economic growth—and potentially triggers a recession.

More money is moving from stocks to bonds (i.e., “safe haven” trade). Bond prices and yields have an inverse relationship, meaning when bond prices go up, long-term yields (including mortgage rates) go down, and vice versa.

Later this week, we’ll send ResiClub PRO members some additional research looking at the potential fallout for housing from the trade war.

Over the past week, ResiClub PRO members (paid tier) got these 3 additional housing research articles:

A look at housing permits across 400 housing markets

Net international migration in 800+ metros and 3,000+ counties

3 reasons U.S. homeowners have weathered this rate hike cycle better than during the run-up to the Great Financial Crisis