States Where Home Prices Are Falling: Data From Zillow and Redfin

Of the 894 housing markets Zillow tracks, prices are expected to fall in 309 through March 2027, hold flat in 14, and rise in 572. The national average home value sits at $372,995, up just 0.8% over the past year, and that near-flat number masks a sharp geographic split between markets softening fast and markets still grinding higher.

Where Prices Are Dropping the Most

The steepest declines are concentrated in markets that saw the biggest pandemic-era run-ups. Austin, Texas; Phoenix, Arizona; Boise, Idaho; and several Florida metros lead the list of markets with year-over-year price drops as of mid-2026. These markets share a common profile: they attracted heavy in-migration between 2020 and 2022, builders responded aggressively with new supply, and demand has since pulled back as remote-work flexibility tightened.

Florida deserves particular attention. Tampa, Cape Coral, and North Port are all in negative territory on a year-over-year basis. Insurance costs in Florida have become a genuine affordability ceiling. Average annual homeowners insurance in Florida now exceeds $5,000 for many coastal properties, a figure that adds roughly $400 per month to the true cost of ownership and is pricing buyers out at the margin.

Tennessee and parts of the Mountain West, including Salt Lake City and Denver suburbs, are also softening. These were secondary boom markets and are now following Austin's trajectory about 12 to 18 months behind.

Why Prices Aren't Crashing Nationally

Redfin's 2026 outlook frames this well: slow demand historically causes prices to fall, but sellers are pulling back too. Homeowners locked into 3% mortgages from 2020 and 2021 are not listing. This inventory constraint is the primary reason a broad national crash is not happening even as individual markets correct.

The national median days-to-pending is 18 days as of June 2026. That is not a crashed market. It is a slow market with regional pockets of real pain. The distinction matters for buyers deciding where and when to act.

Mortgage rates remain the central variable. Rates have moderated from their 2023 peak but have not returned to anything close to pandemic lows. At current rates, the monthly payment on a $372,995 home with 20% down is roughly $2,100 before taxes and insurance. In high-tax states, that number climbs fast. New Jersey's effective property tax rate of 2.13% adds another $660 per month on a $372,000 home.

The Cheapest States to Buy Right Now

If raw price is the primary filter, the Midwest dominates. West Virginia, Mississippi, Arkansas, Iowa, and Ohio consistently post the lowest median home prices in the country. West Virginia's median hovers around $165,000 as of mid-2026. Iowa sits near $210,000. These states are not experiencing price declines because they never experienced the speculative run-up that would require a correction.

Buyers focused purely on sticker price should pair that analysis with total cost of ownership. A $165,000 home in West Virginia comes with lower taxes than a $165,000 home in Illinois, where property taxes in Cook County suburbs can exceed 2.5% effective rates. The purchase price is only one number in the equation.

For retirees specifically, the state tax picture matters as much as the home price. States with no income tax and favorable treatment of retirement income stretch a fixed budget further. Our post on best states for retirees to avoid taxes breaks down which states protect retirement income most aggressively.

Should You Buy Now or Wait?

The honest answer depends on the specific market and your financing situation. In the 309 markets where Zillow projects continued declines through March 2027, waiting has a defensible logic. In the 572 markets where prices are projected to rise, waiting costs money.

The crash-versus-correction framing also matters. A 5% to 8% price decline in Austin or Phoenix is a correction, not a crash. National prices falling 20% to 30% would require a wave of forced selling, mass unemployment, or a credit event. None of those conditions are present in mid-2026.

If you are comparing states before making a move, factor in property taxes, state income taxes, and insurance costs alongside the purchase price. Use our state comparison calculator to run the full numbers before committing to a market. And if capital gains on a home sale is part of your decision, our capital gains tax by state breakdown shows exactly what you will owe in each state when you eventually sell.

Key Takeaways

• Zillow projects price declines in 309 of 894 tracked markets through March 2027, with Florida, Texas, and Mountain West metros leading the drops.
• The national average home value is $372,995, up just 0.8% year-over-year as of June 2026, masking wide regional variation.
• The cheapest states by median price are West Virginia (around $165,000) and Mississippi, but effective property tax rates and insurance costs can erase purchase-price advantages quickly.

Compare every state's full cost of homeownership, taxes, and cost of living side by side at liveordiehere.com.