Housing Price Slump Expands From Just 6 to 32 Markets
The housing slump no longer exists in just several markets – but now extends to dozens. Over the course of 2025, the number of large metros that experienced a drop in home prices rose from six in January to 32 by October – the broadest softening since the early 2010s, according to a new report from Cotality.
The areas worst affected by the price declines were Miami and St. Petersburg, Rochester, Las Vegas, Seattle and Dallas, TX. In each case, home prices slipped by six percentage points or more. Five other markets in Florida are also at high risk of price decline, including Cape Coral, Lakeland, North Port, Palm Bay and West Palm Beach.
Even where prices appreciated year-over-year, the initial improvement of 3.4% in January gave way to slower growth, resulting in an eventual increase of just 1.1% nationally in October – the lowest rate since 2012. Appreciation trends varied widely.
However, the correction may have been necessary, according to Dr. Selma Hepp, Cotality’s chief economist.
“Slowing price growth reflects a much-needed rebalancing after years of unsustainable gains," she commented. "These adjustments will help restore affordability over time and make housing more accessible to a wider group of buyers.”
Price slowdowns were attributed to high mortgage rates, affordability challenges and a sharp increase in inventory following a surge in the supply of both existing and newly built homes, slowing rates of in-migration and weaker demand.
Nevertheless, home prices are expected to resume their growth at a 4.3% rate from Oct. 2025 to Oct. 2026. A significant drop in future mortgage rates and low supply could trigger appreciation and reshape the housing market.
Meanwhile, the nation’s 10 “coolest” markets were Champaign, IL (prices down 10.6%), Punta Gorda, FL (-8.9%), Wichita Falls, TX (-8.4%), Victoria, TX (-8%), Cape Coral (-6.9%), Sebastian, FL (-6.5%), North Port (-5.9%), St. Petersburg (-5.5%), Waco, TX (-4.9%) and Brownsville, TX (-4.9%).
“Looking ahead, regional differences will remain pronounced, with demand favoring areas that offer both economic opportunity and relative affordability,” Hepp noted.
Source: GlobeSt/ALM