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During and after the pandemic, U.S. home prices in many cities swung too close to the sun. Now their wings are beginning to melt, as interest rates have remained high for longer than most analysts expected.
The following comes home price data and forecasts ZillowWhich estimates a nationwide housing improvement of 1.0% over the next 12 months. But this recovery will not be felt evenly across the country, and these 20 cities will feel the pinch more than others.
10 small cities expected to collapse
Smaller housing markets experience greater price volatility because their volume is not equal. After all, robots move faster than battleships.
Zillow predicts that home prices will fall the most in these ten cities next year:
- Greenville, Mississippi: -16.7%
- Clarksdale, Mississippi: -14.8%
- Pecos, Texas: -13.7%
- Cleveland, Mississippi: -13.6%
- Bennettsville, South Carolina: -11.9%
- Opelousas, Louisiana: -11.5%
- Raymondville, Texas: -11.5%
- Hobbs, New Mexico: -11.4%
- Morgan City, Louisiana: -11.3%
- Indianola, Mississippi: -10.8%
“Many Sun Belt and Gulf Coast metros are poised for a price correction by mid-2026,” real estate agents and investors say. jacob naig. “What is driving them all is a toxic solution of pandemic-era overvaluation, investor speculation and the kind of new construction that has far outstripped anything local housing markets could hope to absorb.”
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The rising cost of insurance has also scared off many home buyers. Max Dugan-Knight, climate data scientist dark skyPointing to massive flood damage and insurance claims in the area over the past few years.
“Flood damage is very expensive and coverage is difficult to obtain,” Dugan-Knight said. “As the risk of flooding continues to rise, so will insurance costs and result in property values falling. And this isn’t just limited to coastal areas – storms are traveling further inland and dumping more water than ever before.”
Expected decline in 10 major metros
Although no major metropolitan area is forecast to see double-digit home price declines, higher home prices in many of them mean steeper declines measured in dollars.
Homeowners (and buyers) should keep a close eye on these 10 big cities:
- New Orleans, Louisiana: -7.2%
- San Francisco, California: -6.1%
- Austin, Texas: -5.1%
- San Jose, California: -4.0%
- Honolulu, Hawaii: -3.8%
- Denver, Colorado: -3.8%
- Sacramento, California: -3.7%
- San Antonio, Texas: -3.6%
- Portland, Oregon: -3.5%
- Washington, DC: -3.3%
Sustained high interest rates have prompted reluctant sellers to list their homes. Many people do not want to surrender their low fixed-interest mortgages, and are delaying the sale in hopes of rates falling. But after three years of high interest rates, many people can no longer delay making a move.
This has led to a surplus of inventory in the market due to a huge surge in supply. Latest housing report by realtor.com Housing inventories released at the end of July showed an increase of 24.8% compared to the previous year.
It also says nothing about long-term economic uncertainty. Overall, sellers can expect a tough 12 months in these metro areas, while buyers can score some rare bargains.