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When will housing prices drop? See which parts of the U.S. are already experiencing decreases.
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Contributor
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Freelance writer
Updated
Mon, December 8, 2025 at 1:16 PM EST
5 min read
Data from Realtor.com shows that homes are staying on the market for longer. The typical home for sale spent 64 days on the market in November 2025 — three more days than this time last year and nine more days than in 2022. You might be wondering: If the housing market is cooling, does that mean home prices are dropping? The answer depends on various factors, particularly on where you’re shopping for a home.
Are house prices going down?
By many markers, home prices are, indeed, going down. Realtor.com’s November report shows annual price declines in 28 of the nation’s biggest 50 metros. Another six cities saw no year-over-year median price changes.
According to the U.S. Census Bureau, the median home price in Q2 2025 was $410,800 — down from $423,100 at the beginning of the year. Housing inventory is also improving, which bodes well for home prices in the coming months. (More houses on the market means less competition, which typically means sellers need to lower prices to win buyers.)
Realtor.com’s data shows that the total active inventory of homes for sale increased by 12.6% between November 2024 and November 2025, and 18% of listings saw a price cut last month.
Still, the national housing inventory is lower than before the pandemic, and it’s unlikely we’ll see a huge jump in listings until mortgage rates fall. Even as home loan rates have been gradually decreasing, many current homeowners are still reluctant to give up the 3% mortgage rates they secured early on in the pandemic. Plus, more sellers have been pulling their homes off the market since they can’t receive the amount of money they want for their houses due to issues with buyer affordability.
Most forecasts anticipate a gradual slowdown in home price growth over the next year. Fannie Mae’s Home Price Index, which measures year-over-year price growth, projects a fall from 2.5% this quarter to just 1.3% by the end of 2026. This could mean a boost in affordability for buyers nationwide.
Where home prices have fallen
But if you want or need to buy a home before those declines come to fruition, choosing your market carefully can be a great way to snag a good deal.
For example, in San Diego, housing prices have fallen by well over 5% in the last year, and the typical home is sitting on the market for two days longer than it did in November 2024. More than half of the listings in the 50 largest metro areas are experiencing price cuts.
Here’s a look at some markets where home prices have fallen the most drastically:
Prices aren’t dropping everywhere, though — the fact that housing costs are down in 28 of the 50 largest metro areas means that prices are stagnant or increasing in 22 of the largest cities. The Northeast is the primary U.S. region where home prices continue to rise. For example, median home prices in the Hartford, Conn., metro area are up 5.6%, and prices in Pittsburgh are up 4.3% since last November.
Strategies for eager buyers
Waiting on more inventory or lower mortgage rates isn’t the only way tos to buy a home affordably.
Here are a few strategies to consider if you see homeownership in your not-so-distant future.
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Buy with an eye on refinancing. You could get into the market today with a home in your price range and look to refinance down the line. While you might get less house for your budget, you can start building equity. When rates come down, you can refinance your mortgage to a lower rate or even a different type of mortgage loan altogether.
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Start small. While it might not be your dream home, you could find housing happiness in today’s market by purchasing a condo or buying a lot and putting a tiny house on it. Both home types can cost considerably less than a single-family home and help you build equity that translates to cash when you’re ready to upsize.
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Go modular. No, these aren’t mobile homes. Modular homes are those that look just like a single-family home when constructed. The only difference is that they’re built in modules off-site and assembled when they get to your lot. They can also cost 10% to 20% less than a traditionally built home.
When will housing prices drop? FAQs
Will 2026 be a better time to buy a house?
It may be good to buy a house in 2026 because, according to industry forecasts from Fannie Mae and the Mortgage Bankers Association, interest rates will probably gradually decrease by then. Home price growth is also expected to slow in certain parts of the U.S.
Will U.S. housing prices ever drop?
Typically, house prices fall when supply exceeds demand, and sellers must lower their prices to entice buyers. As of November 2025, the home supply was increasing, but inventory in the Northeast had not yet returned to pre-pandemic levels.
Is it smart to buy a house right now?
If your finances are in order and it’s the right stage of your life, it could be a smart time to buy a house. Interest rates have stubbornly remained elevated, but they aren’t at sky-high levels. Home price growth has also slowed, with many markets experiencing price declines in recent months.
Laura Grace Tarpley edited this article.