Which Cities Are Seeing Home Prices Fall?

The U.S. housing market, a dynamic and complex economic sector, experiences shifts that vary significantly by region. While some areas continue to see home values appreciate, other local markets are undergoing notable corrections. This creates a diverse landscape where national averages often mask specific local conditions and trends. Understanding these regional differences is crucial for navigating the current real estate environment.

Understanding Home Price Declines

Observing and measuring home price declines involves tracking specific metrics over defined timeframes to identify downward trends. The median sale price, which represents the midpoint of all sales prices, is a commonly used metric as it is less influenced by extremely high or low sales than the average sale price. Price per square foot can also offer insights into value changes, accounting for variations in home size.

Declines are measured over various periods, including month-over-month, quarter-over-quarter, and year-over-year comparisons, to identify consistent patterns. For example, a city might show a 2.4% annual decline in sales prices. This signifies prices are moving downward from a previous peak, contrasting with periods of appreciation or stagnation.

It is important to distinguish between a market correction and a full-blown crash. A correction involves a more gradual and measured adjustment of prices, often after rapid appreciation, driven by increasing inventory and tighter financial conditions. This differs from a severe market crash, characterized by a rapid, widespread collapse in values, often fueled by speculative demand and lax lending standards. Current market conditions reflect a recalibration rather than a catastrophic collapse, supported by tighter lending standards and generally lower inventory levels compared to historical averages.

Key Factors Influencing Local Real Estate Markets

Several economic and demographic factors contribute to home price declines in local markets. A primary influence is the balance between housing supply and buyer demand. An oversupply of available homes, especially new construction, relative to interested buyers, can exert downward pressure on prices. Conversely, a lack of new supply can sustain higher prices, even with cooling demand.

Local economic conditions, particularly the job market’s health, play a role. Areas experiencing layoffs or a decline in dominant industries may see reduced buyer confidence and diminished purchasing power, leading to fewer sales and price adjustments. Population shifts, such as net out-migration from a city or region, can exacerbate an imbalance by reducing the pool of potential homebuyers.

Changes in interest rates affect buyer affordability and demand. Elevated mortgage rates can increase the cost of homeownership, leading some prospective buyers to delay purchases or reduce their budget, cooling demand and contributing to price declines. Local affordability constraints can also trigger a market correction. When home prices have risen to unsustainable levels relative to local incomes, a market adjustment often occurs as fewer buyers can afford to enter.

Cities Experiencing Price Declines

Several metropolitan areas have recently experienced declines in home prices, often due to a combination of the factors discussed. These trends highlight regional variations within the broader national housing market.

Tampa, Florida, has seen an annual price decline, with a 2.4% drop in May and June, continuing a trend of negative year-over-year growth. This is attributed to an increase in housing inventory and rising insurance costs, which have made homeownership more expensive.

Dallas, Texas, has experienced annual declines in sales prices, with losses deepening after turning negative in April. The market is influenced by a high price-to-income ratio, straining affordability for many buyers. A notable presence of investor-owned properties has also contributed to market volatility and increased supply.

Denver, Colorado, saw its first annual decline in home values in nearly two years as of May, reflecting a shift in market dynamics. Price cuts have become more common, signaling an adjustment to buyer expectations and available inventory. This indicates a recalibration of values after rapid appreciation.

In San Francisco, California, home prices dropped by 2.38% year-over-year as of May 2025. This high-cost market is undergoing an economic recalibration, driven by tighter financial conditions and evolving employment patterns that have affected demand.

Austin, Texas, has witnessed a correction, with median listing prices falling nearly 15% over the last three years as of July 2025. The city experienced rapid price appreciation during the pandemic, and now faces increased inventory and numerous price reductions, indicating a strong buyer’s market.

Phoenix, Arizona, registered annual declines in sales prices in June. This market, like others in the Sun Belt, saw substantial price surges during the pandemic. Now, an increase in housing inventory above pre-pandemic levels and competition among builders are contributing to price adjustments.

Miami, Florida, has seen prices drop around 19% over the last three years as of July 2025, with annual declines noted in June. The market is influenced by previous rapid price increases, which created affordability challenges, combined with an expanding inventory of available homes.

San Diego, California, experienced annual declines in June, with a 0.58% dip in its median sale price. This represents a reversal for a market that had recently seen soaring prices, now impacted by significant growth in housing inventory.