R
eal estate experts are now predicting a sharp decline in US home prices, marking the first time since 2011 that prices will fall. Zillow economists forecast a 0.9 percent drop in average US home prices between April 2025 and April 2026, reversing their earlier prediction of a 2.9 percent increase. This reversal is largely due to an increase in listings, providing buyers with more options and bargaining power.

    The pandemic-era property boom has finally begun to level out, as mortgage rates have more than doubled from their lows, pricing many potential buyers out of the market. The average monthly mortgage payment now accounts for 35.3 percent of median household income, making homeownership a burden for some. Zillow's chief economist notes that a 20 percent down payment on the average home is now equivalent to $72,000, a significant entry fee.

    Cities such as Greenville, MS, and Cleveland, MS, are expected to see large price drops, with declines of 16.2 percent and 12.5 percent respectively. Florida's once-hot housing market will also experience a decline, due in part to a surplus of inventory and soaring insurance premiums. Louisiana is another state where home values are predicted to fall, with Houma and Lake Charles expected to see decreases of 10.2 percent and 8.4 percent.

    However, not all areas will experience a decline. Zillow predicts that Torrington, CT, will see a 2.4 percent increase in home values, while Kingston, NY, will experience a 2.6 percent rise. Atlantic City, NJ, is expected to see the strongest home price appreciation at 3.2 percent. This shift in the market is good news for buyers, who will finally have more bargaining power and options in the coming year.