During and after the pandemic, U.S. home prices in many cities flew a little too close to the sun. Now their wings are starting to melt, as interest rates have stayed higher for longer than most analysts expected.
Be Aware: 7 Cities With Homes Expected To Plummet in Value in the Second Half of 2025
Try This: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, To
The following home price data and forecasts come from Zillow, which anticipates a nationwide housing correction of 1.0% over the next 12 months. But that correction won’t be felt evenly across the country, and these 20 cities will feel more burn than most.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
10 Small Cities Forecast To Crash
Smaller housing markets experience more price volatility, because they don’t have the same volume. Rowboats turn faster than battleships, after all.
Zillow projects home prices in these ten cities to fall the farthest over the next year:
Greenville, Mississippi: -16.7%
Clarksdale, Mississippi: -14.8%
Pecos, Texas: -13.7%
Cleveland, Mississippi: -13.6%
Bennettsville, South Carolina: -11.9%
Opelousas, Louisiana: -11.5%
Raymondville, Texas: -11.5%
Hobbs, New Mexico: -11.4%
Morgan City, Louisiana: -11.3%
Indianola, Mississippi: -10.8%
Read More: 4 Housing Markets That Have Plummeted in Value Over the Past 5 Years
“Many Sun Belt and Gulf Coast metros stand poised for price corrections by mid-2026,” notes real estate agent and investor Jacob Naig. “What’s driving all of them is a toxic slurry of pandemic era overvaluation, investor speculation and the kind of new construction that has outpaced anything local housing markets can be expected to absorb.”
Soaring insurance costs have also spooked many homebuyers. Max Dugan-Knight, climate data scientist at Deep Sky, points to the massive flood damage and insurance claims suffered in the region over the last few years.
“Flood damage is enormously costly and coverage is hard to get,” Dugan-Knight said. “As flood risk continues to increase, so will insurance costs, and property values will drop as a result. And it’s not just restricted to coastal areas — storms are travelling further inland and dropping more water than ever before.”
10 Major Metros Expected To Drop
While no major metropolitan areas are forecast for a double-digit home price crash, the higher home prices in many of them mean a steeper drop measured in dollars.
Homeowners (and buyers) should keep a watchful eye on these 10 larger cities:
New Orleans, Louisiana: -7.2%
San Francisco, California: -6.1%
Austin, Texas: -5.1%
San Jose, California: -4.0%
Honolulu, Hawaii: -3.8%
Denver, Colorado: -3.8%
Sacramento, California: -3.7%
San Antonio, Texas: -3.6%
Portland, Oregon: -3.5%
Washington, D.C.: -3.3%
Sustained high interest rates have pushed reluctant sellers to list their homes. Many don’t want to surrender their low fixed-interest mortgages, and have delayed selling in hopes of falling rates. But after three years of higher interest rates, many simply can’t delay moving any longer.
That’s led to a surplus of inventory hitting the market, for a huge bump in supply. The latest housing report by Realtor.com released at the end of July shows housing inventory jumping 24.8% over the last year.
That says nothing of lingering economic uncertainty either. All in all, sellers can expect a tough 12 months in these metro areas, while buyers may score some rare bargains.
More From GOBankingRates
3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025
Proven Ways Small Business Owners Are Protecting What They’ve Built
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
5 Things You Must Do When Your Savings Reach $50,000
This article originally appeared on GOBankingRates.com: 20 Cities Where Home Prices Are Expected To Crash in the Next 12 Months
