According to the latest analysis of the Zillow Home Value Index, U.S. home prices have increased by only 0.2% year-over-year between January 2025 and January 2026, marking a significant deceleration from the 2.6% growth rate a year earlier. This slowdown has resulted in 100 of the nation’s 300 largest housing markets experiencing year-over-year declines in home prices.
The number of major metro area housing markets seeing year-over-year declines climbed in the first half of 2025, but has since stabilized. The count of declining markets has fluctuated between 31 and 110 over the past year, with the current figure standing at 100, representing 33% of the 300 largest housing markets. Regions such as the Northeast and Midwest, where active inventory remains below pre-pandemic 2019 levels, are still seeing home price growth, while areas like Texas, Florida, and Colorado, where inventory exceeds pre-pandemic levels, are experiencing modest home price pullbacks or flat pricing.
The softening of the housing market is particularly pronounced in Sun Belt regions, including the Gulf Coast and Mountain West, where home prices surged during the Pandemic Housing Boom. The abundance of new home supply in these areas has led to builders lowering prices or offering affordability incentives, which has a cooling effect on the resale market. As a result, some buyers are opting for new construction over existing homes, adding to the resale inventory growth and further softening the market.
While 100 markets are experiencing year-over-year declines, another 200 are still seeing home price increases. The historical chart of the year-over-year change in home prices across the 50 largest metro housing markets shows that the current “bifurcation” between rising and falling markets is wider than normal. For example, home prices in the Hartford, CT metro area are 21.2% above their 2022 peak, while home prices in the Austin, TX metro area are 27.8% below their 2022 peak. This disparity is largely due to mean reversion, with many of the outright home price declines occurring in markets that overheated during the Pandemic Housing Boom.
The stabilization of the number of declining markets and the slowing of inventory growth suggest that the housing market may be approaching a new equilibrium. However, the widening gulf between resilient and weaker markets is likely to continue, with some areas experiencing significant home price growth while others face declines. As the market continues to evolve, it will be important to monitor the trends and shifts in the housing market to understand the implications for buyers, sellers, and the overall economy.
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