America's property market is undergoing a significant correction, with home price declines now affecting nearly a third of the nation's largest metropolitan areas. This marks the most widespread pullback since 2012, according to the latest data, signalling a stark reversal from the years of relentless gains that characterised the post-pandemic boom.
From Boom to Correction: The Numbers Behind the Shift
The scale of the slowdown has escalated rapidly throughout 2025. At the start of the year, only six of the top 100 metro areas were recording year-over-year price falls. By October, that number had surged to 32, based on the latest home price insights from analytics firm Cotality. Nationally, annual price growth has slowed to a near standstill, rising a mere 1.1% in October. This represents the weakest pace of growth in over a decade and a steep deceleration from the 3.4% rate seen earlier in the year.
Dr. Selma Hepp, chief economist at Corelogic, commented on the shift, stating, 'Slowing price growth reflects a much-needed rebalancing after years of unsustainable gains.' She added that these adjustments should help restore affordability over time, making housing accessible to a wider pool of buyers.
A Tale of Two Markets: Sun Belt Slump vs. Midwest Momentum
The national average obscures a deeply divided landscape. The slowdown is not uniform but is being driven by sharp, concentrated declines in a handful of former boom states. Nine of the ten weakest housing markets are located in just two states: Florida and Texas.
In Florida, five metros are among the top ten for declines, with falls ranging from 5.5% to 8.9%. The affected areas include Punta Gorda, Cape Coral, Sebastian, North Port, and St. Petersburg. In Texas, four markets feature in the worst ten, with price drops from 4.9% in Waco and Brownsville to 8.4% in Wichita Falls.
These declines directly reflect the extreme inflation these markets experienced during the pandemic, when remote workers flocked in and mortgage rates were at historic lows. Once borrowing costs rose, demand evaporated. Simultaneously, a surge of supply from homes built or bought during the boom has hit the market, forcing sellers to compete and cut prices.
In stark contrast, parts of the Midwest, Northeast, and Pacific Northwest are witnessing robust growth. Terre Haute, Indiana leads the nation with prices up 15.0% over the past year, followed by Youngstown, Ohio at 13.0%. Other strong performers include Muncie, Indiana (up 11.6%) and Muskegon, Michigan (up 10.6%). These areas, which saw more modest gains during the pandemic, are now benefiting from stable local demand and less speculative pressure.
The Outlier and the Outlook
The one exception in the top ten declining markets is Champaign, Illinois, where prices have fallen 10.6%—the steepest drop of any major metro. Unlike the Sun Belt, Champaign did not experience a bidding-war frenzy; its market has been weighed down by slower population growth.
Looking ahead, economists believe regional disparities will remain pronounced. Dr. Hepp notes, 'Demand will favour areas that offer both economic opportunity and relative affordability.' The critical factor for the 2026 market will be mortgage rates. 'A notable drop in mortgage rates combined with low supply could lead to a re-acceleration of price gains,' Hepp concluded. For now, the explosive gains of 2022 are firmly in the rearview mirror as the market seeks a new equilibrium.
