There is much data to support the editorial commentary we hear in our industry about “housing coming back down to earth.” I’m not buying it. Yes, maybe it’s coming down from earth’s outer orbit and settling into less rarified air, but by no means is the housing market headed for a hard landing.
We all know the drill: new and resale housing has suffered the longest running soft, or “frozen,” market for the last three-plus years, the longest in almost the last 20 years going back to the 2007 housing bust. Historically, national housing downturns in the U.S. often last two to five years, with the 2000s crash sitting at the extreme end of that range.
National home-price growth peaked around mid-2022 and transaction volumes dropped sharply thereafter, as 30-year mortgage rates spiked and refinancing/turnover collapsed. By late 2025, analysts describe the market as effectively “frozen” for about three-plus years; very low new-mortgage flow, reluctant sellers locked into low rates, and an increasing share of homes seeing flat or falling valuations.
And falling home values are not a mirage. Home values are falling for more than half of the nation, the biggest share in more than a decade, when the U.S. was still struggling to claw out of the Great Recession. As of October, a shocking 53 percent of homes in the country had lost value in the past year, according to recently released data from Zillow. Nationally, home price appreciation has been roughly flat, but that figure masks large regional disparities. Home prices are falling in much of the Southeast and parts of the West, while they are rising in many cities in the Midwest and Northeast. Prices have been cooling in much of the country this year as inventory levels have climbed, but buyer demand hasn’t materialized. Many would-be buyers have remained on the sidelines amid economic uncertainty, mortgage rates above 6 percent, and an ongoing price standoff with sellers.
Metro areas with the greatest share of homes that have lost value include many one-time pandemic boomtowns and regions that have aggressively expanded their housing supply in recent years. In Denver, 91 percent of home values have dropped from their peaks, followed by 89 percent in Austin, Texas, and 88 percent in Sacramento, Calif. More than 80 percent of homes in the Florida cities of Jacksonville, Orlando, and Tampa have also lost value, along with 87 percent in Dallas and 86 percent in San Antonio.
We are now at a three-year peak for affordability across the country, as the average drop from peak valuations is 9.7 percent. That is larger than pricing setbacks seen in recent years, but on par with pre-pandemic fluctuations. It is also far from a crash. Back in 2012, the last time this many homes were depreciating, values cratered as much as 27 percent from their precrisis highs. And another key difference is that very few homeowners are taking big losses now. Most homeowners are still sitting on major equity gains; the median increase is 67 percent according to Zillow, especially given the rapid run-up in home prices in the last six years.
The last earlier downturn of 2007-2010 featured steep price drops and a systemic financial crisis, whereas the current period has seen price stagnation or mild declines in many metros but still near-record national price levels, held up by constrained supply and fixed-rate mortgages at historic lows when they were originated.
Historically, U.S. housing downturns, measured by either real prices or residential investment, often span two to five years before a clear upturn; the current soft patch is now at the lower end of that range in duration but atypical in that prices have not corrected deeply. Forward-looking research for 2026-2030 generally expect sales activity to normalize and price growth to flatten rather than a repeat of the Great Recession-style collapse, suggesting this may go down as a long stagnation rather than a classic crash.
And so it goes. Housing isn’t coming down to earth, but the run-ups of the past few years are surely over, possibly adding a tailwind to home affordability.