Jeff Vasishta
Wed, May 28, 2025 at 1:30 PM EDT4 min read
Home Values Dropping In 27 Of 50 U.S. States As The Housing Market Shifts Amid Continuing High Interest Rates, Zillow Data Shows
Home Values Dropping In 27 Of 50 U.S. States As The Housing Market Shifts Amid Continuing High Interest Rates, Zillow Data Shows
The U.S. is critically divided by its housing markets according to new data from Zillow (NASDAQ:Z). The listings and analytics site finds that 27 out of the 50 states experienced drops in monthly home values from March to April. The greatest drops have occurred in Florida, Colorado, Washington, D.C., California and Washington state.
Other States Are Catching Up To The Sunbelt In Price Reductions
Since the pandemic, low inventory has caused house prices to increase. However, as more homes have come onto the market and high interest rates have kept buyers on the sidelines, sellers have been forced to drop their prices, Zillow’s data shows. A deluge of new construction in the Sunbelt initially saw Texas and Florida experience price reductions. Now, other states are joining them.
According to Zillow, Colorado, Washington, D.C., California, and Washington state have all seen notable price reductions over the past year, with Arizona, Louisiana, West Virginia, and Georgia not far behind, with as much as a 0.37% decrease in values. However, the Sunbelt has seen the greatest decline, while the Northeast has maintained its values.
The Northeast Continues To Experience Gains
“Housing markets in the Northeast continue to experience stronger price gains due to greater income growth and an ongoing severe shortage of homes for sale,” Selma Hepp, chief economist at Cotality, said in an April home price report. “In contrast, markets in the Southeast and West, which have seen more inventory growth and weakening demand, are experiencing more price discounts and lower home price gains.”
The Five Most Affordable Cities In The U.S.
The five most affordable cities in the U.S., according to Cotality, are:
Marion, Illinois: $115,000
Danville, Illinois: $115,000
Enid, Oklahoma: $118, 250
Johnstown, Pennsylvania: $120,000
Cumberland, Maryland: $136,000
The Likelihood Of A Housing Crash
With over half the states in the U.S. experiencing price cuts and other states still trending up, the question of a national housing crash inevitably comes to mind, as in 2008, when a bubble was about to burst. Many experts think this unlikely, however.
Markets sink as Fed’s decision fuels uncertainty
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“The record low supply of houses on the market protects against a market crash,” Tom Hutchens, executive vice president of production at non-qualified mortgage lender Angel Oak Mortgage Solutions, told Forbes.
Also, unlike 2008, many of today’s homeowners are sitting on equity, have low interest rates, or are mortgage-free. Despite this, real estate professionals seem to think that an imminent housing recovery is not on the cards.
“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” Keith Gumbinger, vice president at online mortgage company HSH.com, told Forbes. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”
Additionally, it’s imperative that interest rates fall for the market to recover. With Federal Reserve Chair Jerome Powell saying that, in a time of political uncertainty, he prefers a “wait and see” approach, that does not seem likely anytime soon.