Home Prices Decline in a Growing Number of Markets as Inventories Climb

Despite persistent affordability challenges and elevated interest rates, home prices continued to climb modestly through the early part of this year, according to our latest State of the Nation’s Housing report. However, high costs and rapidly rising for-sale inventories have led to more recent declines in home prices (Figure 1). Nationally, prices rose by just 2.2 percent year over year in May, compared to 5.9 percent the year prior, and fell on a monthly basis for the third consecutive month (Figure 1). Even with this downtick, national home prices are still 57 percent higher than in 2019 but price trends are beginning to diverge in markets across the country. Prices are declining in a growing number of markets where inventories have soared while they continue to climb in markets where for-sale inventories remain tight.

Figure 1: Home Prices Are Declining Modestly

Source: JCHS tabulations of S&P CoreLogic Case-Shiller US National Home Price Index.

Many markets began to show signs of a slowdown early in the year, and the number experiencing price declines has only continued to grow. According to Center tabulations of the Freddie Mac House Price Index, 12 of the 100 largest markets posted annual home price declines in the first quarter of 2025. By June, that number had climbed to 29 markets, the most since mid-2023, when rising interest rates cooled markets substantially.

Prices have fallen predominantly in the South and West, where inventories have risen fastest. Indeed, between 2019 and 2025, active inventories increased 14 percent on average in the West and 11 percent in the South. As a result, prices decreased in over two-fifths of markets in each region (Figure 2). Prices contracted the most in previously hot Sunbelt markets. For example, in Cape Coral, where inventories have risen 46 percent above pre-pandemic levels, home prices declined 7.8 percent year over year in June. In fact, home prices fell in all large Florida markets. In the West, home prices declined most in San Francisco (down 3.7 percent), Stockton (down 2.8 percent), and Tucson (down 1.4 percent), all markets where inventories are above pre-pandemic levels. Meanwhile, signs of cooling are beginning to show even in the Midwest, as prices declined by 1.4 percent annually in Wichita, one of the three metro areas in the region where inventories meet or exceed 2019 levels.

Figure 2: Home Prices Fell Most Where Inventories Have Made Greatest Gains

Note: Data are for the 100 largest metros by population.
Source: JCHS tabulations of Realtor.com data; Freddie Mac House Price Index.

Home prices continued to rise, however, in markets where inventories remain particularly constrained, especially in the Northeast and Midwest. Indeed, active inventories were 52 percent below pre-pandemic levels on average in the Northeast and 26 percent below in the Midwest. As a result, prices grew in all 16 Northeast markets, ranging from 3.3 percent in Pittsburgh to 10.0 percent in Rochester. Aside from Wichita, home prices rose across Midwest markets, with increases between 2.1 percent in Kansas City and 7.3 percent in Milwaukee.

Despite recent declines in some markets, home prices have risen considerably since the pandemic in nearly every large metro area. Prices have grown most in Sunbelt markets with sustained domestic in-migration, especially Knoxville where prices have nearly doubled since 2019 (Figure 3). Even in Cape Coral, where home prices declined most over the past year, prices were still 57 percent higher in June 2025 compared to June 2019. Prices have also increased considerably in lower-cost Northeastern markets where prices continued to rise over the last year, including Rochester (up 83 percent since 2019), Syracuse (80 percent), and Scranton (75 percent). In these markets, limited homebuilding since the pandemic has kept inventories constrained. Even where home price growth has been slowest, prices have risen by more than a fifth. Since 2019, prices were up 22 percent in San Francisco, where persistent affordability challenges and higher domestic outmigration have dampened housing demand.

Figure 3: Prices Far Exceed Pre-Pandemic Levels Across Large Markets

Notes: The markets with the highest and lowest home price growth for each region are shown. Data are for the 100 largest metros by population.
Source: JCHS tabulations of Freddie Mac House Price Index.

Today’s elevated prices present a formidable barrier to homeownership, particularly amid high interest rates and economic uncertainty. Would-be homebuyers are increasingly sidelined, while first-time buyers are all but locked out. But in recent months inventories have continued to increase as homes spend more time on the market. Future buyers could benefit from rising inventories and moderating prices in some markets, but with home prices already high, substantial affordability challenges will persist.