The United States’ housing market is experiencing a widening rift that’s reshaping the landscape.

According to recent insights from Zillow, the national housing scene remains fragile, with home prices rising only slightly compared to last year.

Among the 50 largest metropolitan areas in the country, half are witnessing an increase in home prices, marking a shift from previous months when most regions saw declines.

The market is not merely fluctuating; it is dividing, with a pronounced geographical split.

Leading this trend are Midwestern cities such as Milwaukee, Chicago, and Cleveland, which are posting some of the nation’s highest annual growth rates, challenging the broader narrative of a cooling market.

Conversely, many previously thriving Southern locales are slowing down. Areas in Texas and Florida, including Austin and Tampa, are experiencing notable downturns, a dramatic contrast to their rapid growth during the pandemic.

Milwaukee – a storied Midwest city built on beer, steel and hard winters –  is emerging as one of the most resilient housing markets in the country, showing strength on multiple fronts. 

Home values have surged 5.7 percent year over year, and the city remains one of the few true seller’s markets left in the United States.

Midwestern markets are leading the charge, with cities like Milwaukee, Chicago , and Cleveland delivering some of the strongest annual growth in the country (pictured: houses in Milwaukee)

Milwaukee is emerging as one of the most resilient housing markets in the country, showing strength on multiple fronts

In practical terms, that means demand still outweighs supply – a rare dynamic in today’s market and a hallmark of stability. Buyers are competing for limited inventory, keeping elevated and signaling a market that hasn’t lost its footing.

By contrast, Austin sits at the opposite extreme – and the warning signs are hard to ignore.

Home prices in the Texas capital have fallen 5.9 percent over the past year, one of the steepest declines among major metros. But the drop in prices is only part of the story. Austin has flipped decisively into a buyer’s market, where supply far exceeds demand.

The roots of this imbalance trace back to the pandemic boom. As demand surged, developers ramped up construction. Now, that wave of new inventory is hitting the market just as buyers are pulling back – creating a widening gap between homes for sale and active buyers.

According to Redfin, there were roughly 10,000 more homes for sale than buyers in Austin as of January, making it the most lopsided buyer’s market in the country.

Daryl Fairweather summed it up bluntly: Austin is ‘the most extreme example’ of a market that overheated during the pandemic and is now correcting. 

Builders flooded the market when demand was red-hot – but now, many sellers are competing in a much cooler environment, often against homeowners reluctant to give up ultra-low mortgage rates.

Sunbelt markets located in Texas, Florida, and Arizona are mostly negative overall, and it all comes down to the pandemic housing hangover.

Home prices in Austin have fallen 5.9 percent over the past year, one of the steepest declines among major metros, but the drop in prices is only part of the story

The roots of Austin’s imbalance trace back to the pandemic boom. As demand surged, developers ramped up construction (pictured: houses in Austin)

Similarly to Austin, boomtowns in these states overdeveloped and are now left with far too many houses and not nearly enough buyers.

An interesting pattern to arise from Zillow’s latest data is the mixed state of California’s housing market. 

While the Golden State is seeing strong month-over-month momentum, most metros are still in the negative when it comes to year-over-year pricing. 

For the month of March, San Francisco saw the strongest monthly gains with a 1.6 percent boost. San Jose was next, with San Diego not far behind. Even Los Angeles saw solid growth.