The U.S. housing market is experiencing a subtle but notable downturn. After a prolonged period of persistent price increases, nearly one-third of the country’s major metropolitan areas are now witnessing price drops—the most extensive decline since 2012.

At the beginning of this year, only six out of the 100 largest metro areas in the nation reported year-over-year price decreases.

According to the latest home price data from Cotality, this figure has now surged to 32 metro areas, marking the largest proportion of declining markets since early 2012.

This significant cooling of the once-booming housing market has economists suggesting that this trend could have long-lasting effects on homebuying patterns in the coming years.

On a national scale, annual price growth has nearly stalled, with an increase of just 1.1 percent in October, marking the slowest rate in over ten years and a sharp decline from the 3.4 percent growth seen earlier in the year.

Digging into the data shows why the national average now looks stuck. Prices are not cooling evenly across the country. Instead, the slowdown is being driven by sharp declines clustered in a small number of former boom states. 

Nine of the ten weakest markets for home price growth are in just two former boom states: Florida and Texas. 

Five of the ten biggest declines are in Florida, where prices are down between 5.5 percent and 8.9 percent in metros including Punta Gorda, Cape Coral, Sebastian, North Port and St. Petersburg. 

St. Petersburg’s waterfront skyline. The city has recorded a 5.5 percent annual decline in home prices amid Florida’s broader housing slowdown. 

Corelogic chief economist Selma Hepp 

Four more are in Texas, with falls ranging from 4.9 percent in Waco and Brownsville to 8.4 percent in Wichita Falls and 8.0 percent in Victoria.

Those declines reflect how hard these markets ran up during the pandemic — and how quickly demand has cooled since.

In many Florida and Texas cities, prices jumped far faster than local incomes as buyers piled in from out of state when mortgage rates were near record lows. 

Once borrowing costs rose, that flow of buyers thinned out fast.

At the same time, supply surged. Homes built or bought during the boom are now coming back onto the market, leaving sellers competing for fewer buyers and cutting prices to get deals done. 

The shift has been especially pronounced in places that became symbols of remote-work living.

The outlier is Champaign, Illinois — the only market in the top ten biggest declines outside Florida and Texas. Home prices there are down 10.6 percent over the past year, the steepest drop of any major metro. 

That fall is striking because Champaign never experienced the same bidding-war frenzy as Sun Belt boomtowns. Instead, the market has been weighed down by slower population growth. 

The Champaign City Building in central Champaign, Illinois, which leads the nation for home price declines with values down 10.6 percent.

Historic downtown Terre Haute, Indiana, which now leads the nation for home price growth with values up 15 percent over the past year.

North Port, Florida suffered a cooling market from January to the end of 2025. High mortgage rates and too much inventory hurt Florida’s housing market

Punta Gorda, Florida, where home prices have fallen 8.9 percent over the past year as once-booming Sun Belt markets cool sharply in 2025.

Muncie, Indiana has seen prices rise 11.6 percent. Muskegon, Michigan is up 10.6 percent, with Fond du Lac, Wisconsin, Kokomo, Indiana and Pittsfield, Massachusetts each recording gains of around 10 percent.

While some of the Sun Belt is sliding backward, a very different picture is emerging in parts of the Midwest, Northeast and Pacific Northwest — where prices are still rising, in some cases at double-digit rates.  

Terre Haute, Indiana leads the country, with home prices up 15.0 percent over the past year. Youngstown, Ohio is close behind, posting a 13.0 percent increase.

Prices in these cities never surged during the pandemic, leaving them less exposed as mortgage rates rose. 

With fewer speculative sellers and more buyers anchored to local jobs and incomes, demand has held up — even as former boomtowns struggle to find footing. 

Nationally, home prices were still rising at a 3.4 percent annual pace in January. 

That momentum slowed steadily through the year, falling to a record low by October — the latest month covered in Cotality’s report, which typically lags by two months due to the depth of its data. 

‘Slowing price growth reflects a much-needed rebalancing after years of unsustainable gains,’ said Cotality’s chief economist Dr Selma Hepp.

Muncie City, Indiana, has seen prices rise 11.6 percent, despite many other metros across the country losing value over 2025

Cape Coral, Florida, is undergoing a major housing market crisis. Home values in the metro dipped in 2025

Hepp said the price declines will help buyers find affordable homes in the market.

‘These adjustments will help restore affordability over time and make housing more accessible to a wider group of buyers,’ she said.

The slowdown has been driven by higher mortgage rates earlier in the year, prices that ran well ahead of what many buyers could realistically pay, and a surge in housing supply in former boomtowns such as Florida and Texas. 

The explosive gains of 2022 — when some Florida and Southeast metros surged by roughly 30 percent — are firmly in the rearview mirror. Price declines now stretch across Texas, California and much of the Mountain West. 

‘Looking ahead, regional differences will remain pronounced, with demand favoring areas that offer both economic opportunity and relative affordability,’ Hepp said. 

Hepp said mortgage rates will determine what happens next.

‘Mortgage rates will play a critical role in shaping the 2026 housing market,’ Hepp said.

‘A notable drop in mortgage rates combined with low supply could lead to a re-acceleration of price gains.’