Are Home Prices Going Down?

Are Home Prices Going Down? U.S. Housing Market Outlook for Late-2025 and 2026

Are Home Prices Going Down?

Nationally, home prices are not broadly falling; they’re edging flat to modestly higher year over year. Beneath that headline, the market is extremely regional. Several Sun Belt metros—especially parts of Florida’s Gulf Coast and select Texas markets—are posting year-over-year declines, while many Northeast and Upper Midwest metros are stable or rising on tight supply. Expect a sideways-to-slightly-up national path into early 2026, with localized softness where inventory and carrying costs have climbed.

The National Picture vs. Local Reality

- National trend: Modest year-over-year price gains and relatively stable month-over-month readings.
- Local divergence:
- Softening pockets: Select Florida Gulf Coast metros (e.g., North Port–Sarasota, Cape Coral) and parts of Texas show mid-single to high-single-digit declines from last year.
- Resilient corridors: Many Northeast and Upper Midwest markets continue to see limited inventory and steady demand, supporting prices.

Why the split? Three levers explain most of it: mortgage rates, supply, and carrying costs (insurance, taxes, HOA/condo dues). Where those three bite hardest, prices bend.

What’s Holding Prices Up (and What’s Pushing Them Down)

Supports
- Chronic Supply Shortage: Years of underbuilding and seller “rate lock-in” keep inventory lean in many metros.
- Demographic Demand: Household formation continues, even as affordability is stretched.
- Tighter Credit than 2006: Lending standards are stronger than in the last cycle, limiting forced selling.
Headwinds
- Mortgage Rates: Payments remain elevated, capping what buyers can afford and pressuring list-price strategy.
- Carrying Costs: Insurance increases (notably in coastal states), property taxes, and HOA/condo reserve requirements reduce purchasing power.
- Local Overbuild or Investor Unwind: In some Sun Belt corridors, a wave of new supply and investor pullback amplifies discounting.

Regional Snapshot: Who’s Up, Who’s Down

RegionPrice TrendPrimary DriversWhat to WatchNortheastFlat to modestly upVery tight inventory; higher incomes in key metrosNew listings and days on market—if they stay low, prices holdUpper MidwestFlat to modestly upBalanced demand; affordability still fairSeasonal listing waves; job growthMountain WestMixedPost-pandemic normalization; migration patterns coolingInventory growth vs. inbound movesTexas (select metros)Flat to downNew construction volume; competition among sellersBuilder incentives; months of supplyFlorida Gulf CoastDown in several metrosInsurance costs; supply increases; investor exits in pocketsRenewal cycles for insurance; cash share of dealsPacific CoastMixedHigh base prices; tech/job trends; limited new builds in urban coresRate path; stock market wealth effects

Are We in a Housing Bubble?

High prices alone don’t define a bubble. A bubble requires detachment from fundamentals, speculative behavior, and loose credit. Today’s market has stretched affordability but generally tighter credit and less speculation than the mid-2000s. The more accurate description is a high-cost, low-volume market with regional corrections where costs and supply rose fastest.

2026 Scenarios: What Could Happen Next?

Base Case (Sideways to Slightly Up)
- Rates: Drift within a range; no dramatic drop.
- Supply: Gradual increase from new listings but still below long-run norms.
- Prices: Flat to low-single-digit gains nationally; continued metro-by-metro divergence.
Bull Case (Stabilization and Lift)
- Rates: Meaningful decline improves monthly payments.
- Demand: Side-lined buyers re-enter; transaction volume rises.
- Prices: Moderate gains, strongest in land-constrained, high-income metros.
Bear Case (Localized Corrections Spread)
- Rates: Renewed spike or economic shock.
- Costs: Insurance/taxes rise further in coastal and HOA-dense markets.
- Prices: More metros see year-over-year declines; discounts broaden beyond the current pockets.

Practical Guidance for Buyers and Sellers

For Buyers
- Underwrite the Carry: Model payment with today’s rate plus a buffer. Include insurance, HOA/condo dues, and likely tax reassessment.
- Buy the Block, Not the Hype: Micro-market variance is huge. Track recent closed comps, list-to-sale price, and days on market within a one-mile radius.
- Negotiate with Data: In soft pockets, target credits for roofs, insurance deductibles, and reserves rather than just a lower price.
- Rate Strategy: Consider a permanent buydown over short-term teasers; make sure the math still works if you can’t refinance quickly.
For Sellers
- Price to Today, Not 2022: Use the last 60–90 days of closed comps and adjust for condition and concessions.
- Pre-Inspection & Disclosures: Reduce fall-throughs by solving repair friction upfront.
- Make Insurance Easy: Provide recent roof docs, wind mitigation, flood elevation certificates, and HOA reserve info to de-risk the buy.
- Concession Smart: Credits for closing costs or interest-rate buydowns can widen your buyer pool without headline price cuts.

Key Indicators to Watch (Simple, Actionable)

MetricWhy It MattersWhat It SignalsMonths of SupplyBalance between buyers and listings4.5 = buyer-leaningNew Listings vs. Pending SalesPace of absorptionIf pendings lag new listings, pricing pressure buildsPrice Cuts ShareSeller realismRising share = softer pricing aheadDays on Market (DOM)Demand strengthA sustained rise hints at future price trimsCash Share of SalesResilience to ratesHigher cash share can prop up prices locallyInsurance QuotesTrue affordabilityHigher premiums cap buyers’ bids in coastal/special-risk zones

Frequently Asked Questions

Are prices going down nationally?
On average, no—most national measures show small year-over-year gains. But several Sun Belt metros are down year over year, and local results vary widely.

Will prices drop if rates fall?
Paradoxically, lower rates can boost demand and support prices. The effect on prices depends on how fast inventory grows and whether carrying costs (insurance/HOA) ease.

Is it smarter to wait?
If you’re in a softening metro and you value optionality, waiting can improve selection and negotiation. If you’re in a tight market with rising rents, buying a well-priced, low-maintenance home you can carry comfortably often beats perfect timing.

What about condos?
Scrutinize reserves, special assessments, insurance, and rental rules. Strong reserves and transparent budgets support values; underfunded associations can suppress demand and pricing.

So... Are House Prices Going Down?

- Nationally: Expect sideways to slightly higher prices into 2026.
- Locally: Some Florida and Texas metros face ongoing discounting, while many Northeast/Upper Midwest markets remain firm on tight supply.
- Strategy: Make decisions at the ZIP and neighborhood level, stress-test monthly costs, and use seller concessions and insurance documentation to bridge affordability gaps. If you tell me the specific city or ZIP codes you’re focused on, I can map the latest micro-market stats—months of supply, price-cuts share, and median DOM—so you know exactly where your leverage is. https://agentsgather.com/are-home-prices-going-down/