Home prices expected to drop in 22 cities as market starts to cool
Subscribe to our free newsletter today to keep up to date with the latest homebuilding news.
The housing market may finally tilt toward buyers in 2026 after years of volatility. Of the 100 largest metropolitan areas in the United States, home prices are projected to decline in 22, most of which are in the South and West. With mortgage rates likely to ease and inventory continuing to grow, buyers in these regions may see rare negotiating power.
Jake Krimmel, a senior economist at Realtor, said the US housing market is poised to become more balanced next year. Mortgage rates, which averaged 6.6 percent in 2025, are expected to fall slightly to an average of 6.3 percent in 2026. Combined with strong wage growth, that change could bring more buyers back into the market.
“2026 is going to be a year where we think the market is going to steady,” Krimmel said. “It’s going to show a lot of signs of getting back on track to what we consider to be normal.”
While rates will remain high by pre-pandemic standards, many analysts say the stability may encourage new listings and unlock buyer demand that has been sidelined by affordability concerns. Both Realtor and Zillow predict existing home sales will rise, albeit modestly, in 2026. Realtor estimates sales will increase less than 2 percent to 4.13 million properties, while Zillow projects a 4.3 percent gain to nearly 4.3 million.
Where prices are likely to fall
Among the 22 metro areas expected to see price declines, Florida cities dominate. Seven of the state’s eight largest cities are forecast to see lower home values in 2026, with Miami as the only exception.
The steepest decline is projected in the Cape Coral-Fort Lauderdale area, where prices may drop by more than 10 percent. The North Port-Sarasota-Bradenton region is expected to see an 8.9 percent drop. Other areas on the list include parts of Arizona, Nevada, and Texas, which also experienced sharp price appreciation during the pandemic housing boom.
Realtor attributes the price drops to increased inventory, which gives buyers more choices and weakens seller leverage. These areas were among the most overheated during the remote work migration and low-rate era of 2020 through 2022. As demand normalizes and pandemic-driven population shifts level off, prices are beginning to correct.
“These places, among others, saw a huge frenzy during the pandemic,” Krimmel said. “Part of what we are projecting is that demand continuing to come back down to earth.”
A turning point for the market
For much of 2025, the housing market remained tight. Home values stayed near record highs and borrowing costs deterred first-time buyers. But Realtor.com’s forecast suggests that 2026 could be the most buyer-friendly year since the pandemic began.
Even in the 78 cities where home prices are projected to rise, gains are expected to be modest. The median increase across those metros is around 4 percent, well below the double-digit jumps seen during the height of the housing surge.
The shift could signal a return to pre-pandemic conditions, where home appreciation was steady but manageable. In that environment, buyers and sellers face more equal footing, and affordability improves incrementally without shocking the market.
To make its projections, Realtor examined inventory trends, new home construction, local economic indicators, and labor market health across the top 100 cities. The report reflects a broader consensus that the housing market is slowly exiting its period of extremes.
While the coming year is not expected to bring dramatic declines in most places, the forecast points to a cooling trend that many would-be buyers have been waiting for. After years of intense competition, bidding wars, and rising costs, the idea of a more stable market could mark a welcome shift.