Home Prices Are Predicted to Drop by 5 Percent or More in These Cities

Newsweek

4 days ago

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Home prices are anticipated to decline by 5 percent or more in 10 metro area housing markets, according to a new report from Zillow.
The real estate marketplace predicted that home prices would drop between April 2025 and April 2026 in large cities such as New Orleans, San Francisco, and Austin.
Why It Matters
Home prices have remained high across the country, with a nationwide median home sales price of $410,800 as of the second quarter of 2025, according to the Motley Fool.
Recent data from the National Association of Realtors showed that median home prices rose to $435,300 in June. That marks a record high for June and the 24th consecutive month of year-over-year increases.
A for sale sign is displayed outside of a home in Los Angeles on August 16, 2024.
A for sale sign is displayed outside of a home in Los Angeles on August 16, 2024.
PATRICK T. FALLON/AFP via Getty Images
What To Know
Zillow predicted the weakest home appreciation in the following 10 metro areas:
Houma, LA → -9.6 percent Lake Charles, LA → -9.5 percent Alexandria, LA → -8.0 percent New Orleans, LA → -7.2 percent Lafayette, LA → -7.0 percent Shreveport, LA → -6.9 percent Beaumont, TX → -6.5 percent San Francisco, CA → -6.1 percent Austin, TX → -5.1 percent Corpus Christi, TX → -5.0 percent
The prominence of Louisiana cities on the list reveals the state's overall population decline, experts say.
"Louisiana is one of just six states that shrunk in population from 2014 to 2024 (by about 1 percent), so if this trend continues, there will be limited demand for home purchases in the next few years across the state," Joel Berner, senior economist at Realtor.com, told Newsweek.
"Louisiana, like much of the rest of the South, is seeing an increase in the number of homes for sale, up 10 percent year over year this June. Weaker demand and expanding supply will yield low price growth."
Kevin Thompson, the CEO of 9i Capital Group and host of the 9innings podcast, said the local economies within the state are likely to feel the fallout from the real estate trends as well.
"My reaction is that Louisiana is about to get worse before it gets better. When housing prices fall, the economies typically slow," Thompson told Newsweek.
Nationwide, Zillow said U.S. home prices would likely fall by 1 percent between June 2025 and June 2025.
Zillow originally predicted home prices to grow by 2.6 percent heading into 2025, but many housing markets softened faster than anticipated.
"The rise in [active] listings is fueling softer [home] price growth, as greater supply provides more options and more bargaining power for buyers," Zillow economists wrote in March. "Potential buyers are opting to remain renters for longer as affordability challenges suppress demand for home purchases."
What People Are Saying
Joel Berner, senior economist at Realtor.com, told Newsweek: "In the end, it seems like all the places on this list are experiencing retractions in home demand, which in a place like Austin, where new construction is strong and a surge of existing homes are hitting the market certainly has the chance to drive prices down."
"It's hard to say what to expect nationwide because of the wide divergence in market conditions from metro to metro and region to region. Buyers in the Northeast, where supply is constrained and demand remains strong, should not expect to see any retreat in prices. Buyers in the South may take note of the current price trends and decide that now is a good time to make a purchase."
Kevin Thompson, the CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek: "This should not have an impact nationally as certain cities may see a slowdown, as they should, but not an outright decline. Housing prices rose rapidly due to the amount of stimulus, migrations, and remote work, but now much of that money has been spent, while prices are starting to correct."
Nationwide title and escrow expert Alan Chang told Newsweek: "The majority of the list is Louisiana property which makes me think this may largely be about the high cost and limited availability of homeowner's insurance. In recent years, there has been reduced availability of affordable insurance due to flooding and weather related damages putting some insurers out of business."
What Happens Next
If housing prices continue to fall, there could be long-term consequences for these real estate markets, Thompson said.
"My main concern is what happens next if prices fall too much," Thompson said. "Will this incentivize those larger institutions to continue to buy up swaths of homes for long term leases and further deplete inventory for single homeowners?"