A Map of All 141 Markets Where Prices Are Falling

Last month, Zillow updated its 2025 forecast to show home prices declining by 1.4% this year. 

Nationwide, the average home price has risen 1.4% over the last 12 months. But growth has slowed considerably over that period, and home prices have already started falling. Over the last three months, Zillow shows the nationwide average home value dip by 0.1% to $367,711. 

Of course, there’s no such thing as a “national” housing market. There are simply thousands of local markets, each moving based on local supply and demand. And more of those local markets have started falling in recent months. 

Cities With Annual Price Declines

Of the nearly 900 cities that Zillow tracks across the US, 141 saw home prices decline over the last year.

Many of them were pandemic darlings like Austin, Texas, which shot up at shockingly fast appreciation rates. 

“In Texas and the Southern region, homes that would’ve sparked bidding wars last year are now seeing nothing but lowball offers, and in many cases, price reductions,” Franklin Ivy, owner of Sound Homebuyers, tells BiggerPockets. “Sellers are having to sweeten the deal or be more realistic on price to get traction.”

In fact, correcting real estate markets that overshot their fundamentals is precisely why the Co-Investing Club I help organize at SparkRental tries to avoid chasing “the next hot market.” We typically look for stable, cash-flowing properties and markets—when we invest in residential real estate at all. 

Here are the 20 worst-performing cities by annual appreciation rate:

Cities with Three-Month Price Declines

As you’d expect in a cooling real estate market, more cities are showing home price declines over the last three months than over the last year. Fully 339 cities across the country saw home prices decline over the last three months. 

Austin Glanzer, a real estate investor and owner of 717HomeBuyers, has seen this slowdown play out all too clearly. “In Pennsylvania, we’ve gone from getting five or six offers on a flip to sometimes getting just one, after two weeks on the market,” he tells BiggerPockets.

These 20 metro areas have seen home values fall the most over the last three months:

What’s Behind the Cooling Market?

There are a lot of reasons why home prices have started pulling back. Here are a few of the big ones.

Rising supply and inventory

The latest housing report from Redfin shows home listings reaching their highest level since March 2020, at 1,942,006. That’s up by 1.2% from the prior month, and up 16.7% year over year. 

“In places where homes were appreciating 15% to 20% year over year during the boom, we’re now seeing price cuts and increased inventory,” observes Lane Forhetz, owner of Fast Lane Real Estate, in a conversation with BiggerPockets. “That gives buyers negotiating power we haven’t seen since before the pandemic.”

Shrinking transaction volume

Just as more new and existing homes hit the market for sale and add to supply, buyers have pulled back. Redfin reports that pending home sales fell by a seasonally adjusted 3.5% from the prior month, and 2.7% year over year.

So why are buyers feeling more cautious?

High home prices

Home prices remain near record highs, despite three years of heightened interest rates. 

In fact, Zillow reports record high home prices in February of this year, at $368,526. And as of April 30, home prices are off those highs by just $800. 

High interest rates

Despite the Federal Reserve cutting interest rates several times in 2024, mortgage rates continue hovering around 7%. 

Why? Because loan rates are driven more by bond markets than the federal funds rate. And bond investors have not liked all the tariff turmoil and trade wars rattling markets. 

Don’t expect much relief on mortgage rates until the White House cools down the trade wars and tariffs, and inflation looks less likely. “The 7% mortgage rates have made affordability a real issue, especially for first-time buyers,” explains Travis Johnson, real estate investor behind Minnesota Nice, to BiggerPockets. “That’s cooling buyer demand across the board.” 

Tariff, inflation, and recession fears

Worries over tariffs and inflation aren’t just keeping interest rates high—they’re also spooking buyers. With so much uncertainty in the economy, no one wants to lay out hundreds of thousands on a major purchase like a house. 

Glanzer is seeing this firsthand in his real estate business. “Buyers have become more cautious, between high financing costs and fears over tariffs and recession,” he says.

Buyers aren’t the only ones worrying about a recession. Both the International Monetary Fund and J.P. Morgan Research estimate the U.S. recession risk in 2025 at 40%. 

Rising insurance costs

It doesn’t help that insurance costs have skyrocketed over the last three years, driving the cost of ownership even higher. That puts even more downward pressure on prices. 

What Should Investors Do?

Active investors will likely see more bargains over the next 12 months as buyer demand cools. Stay aggressive with your offers, and don’t accept mediocre deals. 

While rents often dip during recessions, they also tend to rebound quickly. Plus, recessions can drive owners to become renters, as homeowners default. That drives demand for rental housing. 

As a passive investor, I continue practicing dollar-cost averaging in my real estate investments. Every month, I invest $5,000 in a new investment through a co-investing club. 

Low minimum investments aside, it also helps reduce risk to vet investments alongside other investors. The members of the co-investing club have been vetting more recession-resilient investments recently, given the heightened risk. 

I stopped trying to time the market a long time ago. I have no idea how the housing market, economy, trade wars and tariffs, and inflation will all play out. So, I’ll keep investing $5,000 every month, spreading my money across dozens of cities, asset classes, operators, and timelines. A few will overperform, a few will underperform, and most will perform around the middle of the bell curve. 

And that’s precisely why I like spreading small amounts across many different investments: They form a bell curve. The law of averages will protect me, no matter which direction the market roller coaster takes us.

Analyze Deals in Seconds

No more spreadsheets. BiggerDeals shows you nationwide listings with built-in cash flow, cap rate, and return metrics—so you can spot deals that pencil out in seconds.