The American housing market is witnessing a significant downturn, with home values declining across more than half of the nation—a trend not seen since the aftermath of the Great Recession. Recent figures provided by Zillow reveal that over the past year, 53 percent of homes in the United States have depreciated in value, marking the highest percentage since 2012 when the housing market was at its lowest point.

While the national statistics might suggest a stagnant market, they obscure the stark variations that exist among different regions, cities, and even neighborhoods. Particularly affected are areas in the South and West, where home prices have been on a downward trajectory as the number of properties on the market rises and potential buyers adopt a wait-and-see approach.

The hesitancy among buyers can be attributed to a mix of factors, including fears of an impending recession, persistently high mortgage rates that exceed 6 percent, and an impasse with sellers who are reluctant to lower their asking prices.

Some of the steepest declines are occurring in cities that experienced rapid growth during the pandemic. For instance, Denver has seen 91 percent of its homes drop from their peak values, followed closely by Austin with 89 percent, and Sacramento at 88 percent. These once-booming markets are now adjusting as they grapple with the broader economic challenges facing the housing sector.

Many would-be buyers are holding off amid recession fears, stubbornly high mortgage rates above 6 percent, and a standoff with sellers who refuse to cut asking prices.

Many of the biggest drops are in once-red-hot pandemic boomtowns. In Denver, 91 percent of homes have fallen from their peak value. It’s 89 percent in Austin, and 88 percent in Sacramento. 

Florida has been hit hard too: more than 80 percent of homes in Jacksonville, Orlando and Tampa are now worth less than they were a year ago. Dallas and San Antonio are also seeing declines of more than 85 percent.

Zillow’s report echoes a similar one from S&P Cotality Case-Shiller that looked at the biggest 20 US metros, and found nine had seen house prices fall. 

This map breaks down the US housing cooldown, pinpointing the metros where the highest share of homes have slipped in value over the past year.

Tampa is seeing one of the sharpest reversals in Florida, with over 80 percent of homes now worth less than a year ago. The city’s rapid run-up in prices has given way to a steep correction across much of the metro

Treh Manhertz, senior economic researcher at Zillow, says the downturn is a ‘normalization, not a crash’

Across the country, the average drop from peak valuation is 9.7 percent — steeper than the tiny dip seen in 2022 but still nowhere near the 27 percent crash recorded after 2008. 

Despite the widespread declines, very few homeowners are actually underwater. 

Nationally, the median gain since a home was last sold is 67 percent. In some markets — including Buffalo, San Jose, Providence, Columbus and San Diego — values have doubled over time. 

Owners tend to stay put longer in these cities, which allows equity to build rapidly. 

Overall, very few Americans are in a home worth less than they paid for it. Only 4.1 percent of US homes are now valued below their last sale price, a smaller share than before the pandemic.

Even among new listings, just 3.4 percent are priced below what the seller originally paid — roughly half the rate seen in 2019. 

The markets seeing the most listings priced below previous sale prices are the ones that surged fastest during the pandemic, including San Francisco, Austin and San Jose.

But in many metros across the Northeast, Midwest and Great Lakes region, less than 2 percent of sellers are taking a loss.

Denver has seen the steepest slide in the country, with 91 percent of homes falling from their peak value. The Mile High City was once a pandemic boomtown, but rising supply and weaker demand have now pushed prices sharply lower

Dallas, long one of the strongest housing markets in the South, has not escaped the cooldown. About 87 percent of homes have dropped from peak value as a flood of new supply and higher borrowing costs weigh on demand

Austin’s red-hot housing market has cooled dramatically, with 89 percent of homes now worth less than they were at their peak. The Texas capital was one of the nation’s fastest-growing metros during the pandemic but is now wrestling with oversupply and falling buyer demand

A surge in for-sale signs hasn’t brought buyers back — and prices are now dropping in most of the country

Zillow says that while the pullback feels alarming, it’s not a sign of another crash.  

‘Homeowners may feel rattled when they see their Zestimate drop,’ said Treh Manhertz, a senior economic researcher at Zillow. 

‘But relatively few are selling at a loss. Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we’re seeing now is a normalization, not a crash.’ 

For homeowners, the message is mixed: values may be slipping from their highs, but most people still have a large equity cushion. For buyers, the market remains stuck — prices are softening, but not enough to offset high mortgage rates or spark a buying surge.