America's Housing Market Downturn Intensifies Across Key States
The United States property market is experiencing a significant correction, with three major states now firmly at the centre of the nationwide housing slump. Florida, Texas and California collectively account for twelve of the fourteen major metropolitan areas where residential property prices are currently declining, according to the latest market analysis.
Sharpest Declines Recorded in Sun Belt Markets
The most pronounced price drop has been recorded in Dallas, Texas, where median sale prices have decreased by 7.6 percent compared to the same period last year. Florida's previously booming housing sector is showing clear signs of strain, with values falling across multiple cities including Miami, Jacksonville, Orlando and Fort Lauderdale.
California continues to face substantial challenges, with four major metros experiencing declining prices. Oakland recorded the second-largest decrease at 5.6 percent, followed by San Jose, Sacramento and Los Angeles. The slowdown is no longer confined to these three states, with Atlanta, Georgia and Denver, Colorado – two additional Sun Belt markets that had previously demonstrated resilience – now witnessing price reductions.
Collapsing Demand Drives Market Correction
Behind these price falls lies a dramatic collapse in buyer demand across the country. Pending home sales throughout the United States dropped by 5.9 percent during December, reaching their lowest recorded level outside of April 2022 when pandemic restrictions effectively halted the housing market. This data comes from Redfin records extending back to 2012.
'Buyers are extremely selective and still think prices are too high,' explained Alison Williams, a Redfin Premier real estate agent based in Sacramento, California. 'There aren't a ton of homes on the market, but there are enough for house hunters to feel like they can take their time.'
Williams noted that numerous property transactions are stalling because prospective buyers need to sell their current homes first, while sellers are increasingly reluctant to accept contingent offers. This standoff is creating market stagnation that is pulling prices downward in some of America's largest housing markets.
National Picture Shows Mixed Signals
Despite the pronounced declines in Sun Belt states, property values remain elevated across much of the country. The median home sale price actually increased by 0.5 percent year-over-year in December to reach $428,742 – the highest December figure ever recorded. While this represents the slowest growth rate since June 2023, it still indicates overall price appreciation that continues to price many potential buyers out of the market.
Certain markets have bucked the downward trend entirely. Detroit, Newark in New Jersey, and St. Louis all experienced significant price increases over the past year, with median sale prices rising by 8.9 percent, 8 percent and 7.8 percent respectively.
Mortgage Rates and Market Dynamics
Current mortgage rates are hovering around 6 percent, approximately double the historic lows seen during the pandemic period. Rates briefly dipped below this threshold last week following a substantial $200 billion mortgage bond purchase initiative, sparking a temporary surge in mortgage applications that could potentially boost January sales figures.
Properties are taking considerably longer to sell across the board. The typical home that went under contract in December spent 60 days on the market – the slowest December pace in a decade and six days longer than the same period last year.
Transaction cancellations are also increasing significantly. Approximately 40,000 home purchases were cancelled during December, equating to 16.3 percent of all pending sales – the highest December cancellation rate since records began in 2017.
Sellers Face Challenging Conditions
Homeowners are listing fewer properties as they recognise the limited pool of potential buyers. New listings decreased by 1.4 percent month-over-month and were down 4.9 percent compared to the previous year.
'Breaking even is a win for home sellers in today's market,' Williams observed. 'Some sellers who purchased within the past five years are finding themselves underwater after accounting for closing costs and commissions. Buyers see dollar signs if a home is outdated, so sellers should make sure their homes are well maintained and consider providing a pre-inspection.'
The typical property that sold in December went for 1.8 percent less than its final listing price – the largest December discount since 2022. Only 22 percent of homes sold for more than their final asking price.
In Houston, the typical home that went under contract did so after 79 days on the market – 19 days longer than the previous year and representing the biggest increase among all analysed metropolitan areas.
