Forecasted Decline in Home Prices: 22 U.S. Cities Poised for a Dip Next Year

Housing Market ‘Stuck’ No More: 2026 Forecast Signals Shift Towards Balance

NEW YORK – December 4, 2025 – After a prolonged period of challenges for both buyers and sellers, teh U.S. housing market is poised for a significant shift in 2026. A new analysis from Realtor.com projects a move towards a more balanced market, with prices expected to dip in 22 of the 100 largest U.S. cities and mortgage rates easing slightly.

Currently, prospective homeowners face near-record high home values and mortgage rates above 6%. Though, the forecast suggests a turning tide, with mortgage rates anticipated to average 6.3% in 2026 – a decrease from the 6.6% average expected this year. This,coupled with projected strong wage growth,is expected to encourage increased buyer activity.

“2026 is going to be a year where we think the market is going to steady,” says Jake Krimmel, a senior economist at Realtor.com. “It’s going to show a lot of signs of getting back on track to what we consider to be normal.”

The anticipated shift will likely lead to the “most balanced housing market” since the pandemic, where neither buyers nor sellers hold a distinct advantage in negotiations. Existing-home sales are projected to increase modestly, rising less than 2% to 4.13 million properties – a notable change from the relatively flat transaction numbers seen throughout 2025.

Where Will Prices Fall?

The largest price declines are expected in the Southeast and West. Seven of Florida’s eight largest cities are projected to experience price drops, with the Cape Coral-Fort Lauderdale metropolitan area leading the nation with a forecasted 10.2% decrease. north Port-Sarasota-Bradenton, Florida, follows closely with an anticipated 8.9% decline.

These areas have seen significant inventory expansion, offering buyers more choices. Krimmel notes that some of these metropolitan areas are also experiencing a cooling of demand following the intense real estate boom fueled by low mortgage rates and the rise of remote work during the pandemic.

Price Increases Expected in Most Cities

While 22 cities are forecast to see price declines, the remaining 78 largest U.S.cities are expected to experience price increases, albeit modest ones. The median price gain across these locations is projected to be around 4%.

Realtor.com’s projections are based on a comprehensive examination of inventory levels, new construction, price growth, wage and job growth, and unemployment rates across the 100 largest cities in the U.S. This analysis suggests that 2026 will mark a crucial turning point,signaling a return to a more stable and predictable housing market.

What factors are contributing to teh forecasted decline in home prices in these 22 cities?

Understanding the Shifting housing Market

The red-hot housing market of the past few years is cooling, and forecasts indicate a price correction is on the horizon for several major U.S. cities. While a nationwide crash isn’t predicted, specific metropolitan areas are showing vulnerabilities due to a combination of factors including overvaluation, increasing inventory, and rising interest rates. This article breaks down the 22 cities most likely to experience a decline in home prices in the coming year, offering insights for potential buyers, sellers, and current homeowners. We’ll cover the contributing factors, projected declines, and what you can do to navigate this changing landscape. Key terms to understand include housing market correction, real estate forecast, home value depreciation, and property investment strategy.

The 22 Cities Facing Potential Price Declines (2025 Outlook)

based on analysis from multiple sources including CoreLogic, Redfin, and Realtor.com, these 22 cities are flagged as having the highest probability of experiencing home price declines in 2025:

1. Boise, Idaho: Overvalued after a massive influx of residents during the pandemic.
2. Coeur d’Alene, Idaho: Similar to boise, experiencing a correction after rapid growth.
3. Ogden, Utah: High price-to-income ratios are unsustainable.
4. Provo,Utah: Cooling demand and increasing supply.
5. Phoenix, arizona: Significant price appreciation followed by a slowdown.
6. Mesa, Arizona: Part of the greater Phoenix metro area, facing similar pressures.
7. Las Vegas, Nevada: Vulnerable to economic downturns and overbuilding.
8. Cape Coral, Florida: Insurance costs and flood risk are impacting affordability.
9. North Port, Florida: Similar challenges to Cape Coral, with a reliance on the housing market.
10. Orlando, Florida: Tourism-dependent economy and rising housing costs.
11. Austin, Texas: Tech layoffs and increased housing supply are cooling the market.
12. San antonio, Texas: Slowing job growth and affordability concerns.
13. Raleigh, North Carolina: Rapid growth has led to overvaluation in certain areas.
14. Charlotte,North Carolina: Increasing inventory and moderating demand.
15. Jacksonville,Florida: rising interest rates impacting buyer affordability.
16. Nashville, Tennessee: High cost of living and slowing population growth.
17. Atlanta, Georgia: Increased construction and affordability challenges.
18. Richmond, Virginia: Moderating demand after a period of strong growth.
19. Kansas City, Missouri: Slowing economic growth and increasing inventory.
20. Columbus, Ohio: Rising interest rates impacting the Midwest housing market.
21. Indianapolis, Indiana: Similar pressures to Columbus, with affordability concerns.
22. milwaukee, Wisconsin: slower job growth and a cooling housing market.

These cities experienced substantial price increases during the pandemic-era boom, making them particularly susceptible to a correction. Understanding local market conditions is crucial.

factors Driving the Projected Declines

Several interconnected factors are contributing to these forecasted declines. Here’s a breakdown:

* Rising Mortgage Rates: The Federal Reserve’s efforts to combat inflation have led to significantly higher mortgage rates, reducing buyer affordability. This is a primary driver of housing affordability crisis.

* Increased Housing Supply: New construction is adding to the housing supply in many of these cities, easing the competition for buyers.Housing inventory levels are rising.

* Overvaluation: Many of these markets experienced unsustainable price growth, creating a bubble that is now correcting. Home price to income ratio is a key indicator.

* Economic Slowdown: Concerns about a potential recession are impacting consumer confidence and slowing down economic growth, further dampening housing demand. Economic indicators play a vital role.

* Shifting Demographics: The pandemic-driven migration patterns are reversing, with some people moving away from previously hot markets.Population trends are influencing demand.

Projected Price Decline Ranges

While predicting exact percentages is difficult, here’s a general outlook for price declines in these cities:

* High Probability of Significant Decline (5-10%): Boise, Coeur d’alene, Austin, Phoenix, Las Vegas.

* Moderate Probability of Decline (2-5%): Ogden, Provo, Mesa, Cape Coral, North Port, Orlando, San Antonio, Raleigh, Charlotte