In a surprising turn of events, not all U.S. housing markets saw rising prices in 2024. Among the 250 largest metro areas, 28 housing markets where prices dropped, offering unique opportunities for buyers as we head into 2025. These shifts underscore the evolving dynamics of the real estate market and highlight regions where affordability has improved after years of price surges.
National Trends in the Housing Market
According to the Zillow Home Value Index, national home prices rose by 2.3% year-over-year from November 2023 to November 2024. While this marks a deceleration compared to earlier in 2024, it also extends the streak of 13 consecutive years of national home price growth. However, the picture changes when we zoom in on specific regions.
In states such as Texas, Florida, and Louisiana, certain markets have seen prices decline due to rising inventory levels, surpassing pre-pandemic norms. For instance, Austin, Texas, saw a 3.4% decline, while Tampa, Florida, experienced a 1.9% dip. These corrections reflect localized economic factors and shifting buyer preferences.
Spotlight on the 28 Housing Markets Where Prices Dropped
The 28 housing markets where prices dropped are primarily located in the Sun Belt and Gulf Coast regions. These areas, once pandemic boomtowns, have struggled to sustain high price levels due to affordability constraints and increased inventory. Here are some key examples:
- Punta Gorda, FL: Leading the list with a 7.8% year-over-year price decline.
- Cape Coral-Fort Myers, FL: Prices dropped by 5.9%, reflecting a correction from pandemic highs.
- Austin, TX: A 3.4% decline highlights the impact of rising inventory.
- San Antonio, TX: Experienced a 2.4% drop, influenced by new construction trends.
- Naples-Marco Island, FL: Prices fell by 3.9%, driven by reduced demand.
Other notable markets include Panama City, FL (-3.6%), Lafayette, LA (-2.2%), and Phoenix-Mesa-Chandler, AZ (-0.4%). The abundance of new home supply in these regions has significantly influenced these trends, as builders offer competitive pricing to attract buyers. Here are the 28 markets experiencing declines:
- Punta Gorda, FL (-7.8%)
- Cape Coral-Fort Myers, FL (-5.9%)
- North Port-Sarasota-Bradenton, FL (-5.7%)
- Naples-Marco Island, FL (-3.9%)
- Lake Charles, LA (-3.9%)
- Panama City, FL (-3.6%)
- Austin-Round Rock-Georgetown, TX (-3.4%)
- Houma-Thibodaux, LA (-3.2%)
- Crestview-Fort Walton Beach-Destin, FL (-2.5%)
- San Antonio-New Braunfels, TX (-2.4%)
- Palm Bay-Melbourne-Titusville, FL (-2.2%)
- Lafayette, LA (-2.2%)
- Deltona-Daytona Beach-Ormond Beach, FL (-2.1%)
- Tampa-St. Petersburg-Clearwater, FL (-1.9%)
- New Orleans-Metairie, LA (-1.9%)
- Lubbock, TX (-1.5%)
- Port St. Lucie, FL (-1.5%)
- Lakeland-Winter Haven, FL (-1.3%)
- Killeen-Temple, TX (-1.3%)
- Ocala, FL (-1.1%)
- Corpus Christi, TX (-1.0%)
- Pensacola-Ferry Pass-Brent, FL (-0.9%)
- Myrtle Beach-Conway, SC-NC (-0.8%)
- Jacksonville, FL (-0.7%)
- Huntsville, AL (-0.6%)
- Dallas-Fort Worth-Arlington, TX (-0.5%)
- Phoenix-Mesa-Chandler, AZ (-0.4%)
- Laredo, TX (-0.2%)
Key Factors Behind the Declines
Several factors have contributed to the price drops in these 28 markets:
- Rising Inventory Levels: Many of these areas have seen active inventory surpass pre-pandemic levels, increasing buyer leverage.
- Pandemic Boomtown Cooling: Markets like Cape Coral and Austin, which experienced significant growth during the pandemic, are now correcting to align with local income levels.
- New Construction Supply: Builders in regions such as the Sun Belt have been willing to adjust prices to maintain sales, impacting the resale market as well.
- Higher Mortgage Rates: Elevated borrowing costs have tempered demand, particularly in areas with stretched affordability.
Outlook for 2025
Will these trends continue into 2025? Economists offer mixed predictions. According to Zillow, some of these softer markets may tighten up, while Moody’s anticipates further declines in many areas. Active inventory will remain a key metric to watch, as sustained increases could signal prolonged price softening. Buyers in markets like Austin and Tampa may find favorable conditions if inventory levels remain elevated.
The 28 housing markets where prices dropped offer a glimpse into the complexities of the U.S. real estate landscape. From pandemic boomtowns adjusting to new realities to regions impacted by rising inventory, these markets highlight opportunities for buyers navigating a challenging economic environment. As we move into 2025, keeping an eye on inventory trends and economic conditions will be crucial for understanding the future trajectory of these housing markets.
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