US Housing Market Shows Signs of Cooling as Prices Decline in Majority of Major Metro Areas
New data indicates that the long-running housing boom in the United States may be losing momentum, with home prices now falling in nearly three out of every five major housing markets across the country. A comprehensive report from Realtor.com has revealed that 29 of the 50 largest metropolitan areas recorded price drops during February, while just 17 experienced price increases and four remained unchanged.
Market Momentum Shifts as Supply Increases and Buyer Caution Grows
The figures point to a significant shift in the housing landscape after years of soaring property values. Across the nation, the typical asking price for a home fell by 2.1 percent compared with the same period last year, dropping to $403,450. This decline coincides with homes taking longer to sell, with the average property now spending 70 days on the market – four days longer than this time last year.
Meanwhile, the number of homes available for sale continues to rise steadily. Listings were 7.9 percent higher than a year ago, marking the 28th consecutive month that housing supply has grown. Despite this increase, the total inventory remains approximately 17 percent lower than pre-pandemic levels, indicating that the market continues to operate under constrained conditions despite recent changes.
Sharpest Declines in Pandemic Boom Cities
The most significant price reductions are occurring in several cities that experienced dramatic growth during the pandemic housing frenzy. Austin, Texas recorded the most substantial decline with prices dropping 8.8 percent, followed closely by Memphis where values fell 8.7 percent.
Major coastal markets are also witnessing notable decreases, including Los Angeles with a 5.8 percent decline, San Diego down 5.3 percent, and Washington, DC experiencing a 5.2 percent reduction. Other large urban centers showing significant falls include Boston with a 4.8 percent decrease, Portland down 4.3 percent, and Phoenix experiencing a 3.9 percent drop.
This pattern suggests that locations where prices surged most dramatically during the pandemic are now undergoing the sharpest corrections as the market adjusts to changing conditions.
Midwest Markets Demonstrate Resilience with Modest Growth
At the opposite end of the spectrum, several cities – predominantly in the Midwest – continue to experience modest price appreciation. Cincinnati recorded the strongest increase at 4.3 percent, followed closely by Kansas City and Pittsburgh, both showing 4.1 percent growth.
Other markets still posting gains include San Jose with a 3.5 percent increase, Indianapolis up 3.3 percent, and Hartford rising 2.6 percent. This regional pattern highlights a widening divergence within the national housing market, with more affordable inland cities demonstrating greater stability while many expensive coastal and Sun Belt markets experience declines.
Mixed Signals with Buyer Activity and Concerning Trends
Despite lower prices, there are indications that some buyers are returning to the market. The number of homes going under contract rose 4.2 percent from a year ago, representing the strongest increase in more than a year. This surge indicates a 15-month high in contract activity, partly attributed to mortgage rates reaching their lowest levels since 2022.
However, concerning trends are emerging alongside this activity. A 'ghosting' phenomenon has been developing in the housing market, with more buyers than ever withdrawing from deals at the last minute. Redfin's data reveals that nearly 40,000 home-sale agreements were canceled in January alone, equivalent to almost 14 percent of all properties that went under contract.
Even more troubling, last month's cancellation rate increased by a staggering 13 percent compared to the same period last year, representing the highest January share in nearly a decade.
Foreclosure Activity Shows Sustained Increase
Another worrying indicator for the housing market is a significant spike in foreclosure proceedings. Attom's latest data shows that US foreclosure activity jumped again in January 2026, with a total of 40,534 properties facing foreclosure filings – a 32 percent increase from the same time last year.
While the total number was slightly lower than December's figures, January marked the 11th consecutive month of rising year-on-year foreclosure activity. This sustained increase provides clear evidence that financial pressure on homeowners is building rather than easing, potentially signaling broader economic challenges ahead for the housing sector.
