Half of the 50 largest U.S. metros saw home prices rise this year, while the other half saw them fall. That’s a precise 25–25 split according to Zillow’s latest data. So the question is simple—where does your market land: boom or bust?
Some surprising places like Cleveland and Buffalo are surging ahead, while major hubs like Austin and Tampa are cooling quickly. But the real story isn’t just who’s up and who’s down—it’s the underlying reasons behind this divide.
In the video and narrative below, I’ll walk you through key insights from Zillow’s report that explain the split and what it means for buyers and sellers today.
And to start, let’s look at why the market feels like it has two completely different personalities depending on where you live.
Why the Market Looks Split in Half
Nationally, home values are almost flat—up just 0.2% year over year.
The typical U.S. home is now valued at about $367,965. Against that backdrop, the split in the 50 largest metros stands out all the more: 25 are gaining, 25 are losing. For example, Cleveland is up 4.7% while Tampa has dropped 6.2%. Those two numbers alone show how differently local conditions are shaping outcomes.
Affordability is one of the clearest dividers. Midwest and Northeast markets, such as Cleveland, Buffalo, or Hartford, still have prices within reach for average families, making them attractive to buyers who have been locked out elsewhere. On the other hand, metros such as Austin and Tampa saw enormous run-ups during the pandemic. Combine those higher baseline values with today’s mortgage rates, and many buyers are priced out, leaving demand weaker and prices falling.
Construction and supply dynamics are just as important. In much of the South and West, builders kept pace during the 2020 to 2024 surge. Four of the five metros with the steepest price drops—Tampa, Austin, Orlando, and Dallas—also rank among the nation’s top ten for new building permits in that period, with Miami as the lone exception. That burst of construction added inventory quickly, so when demand eased, prices corrected faster. In contrast, metros with tighter land-use restrictions or slower permitting, such as Buffalo, never produced enough homes to keep up with buyers. Inventory remains limited, and this scarcity supports prices even in a cooler national market.
Even so, the shortage of homes hasn’t gone away nationwide.
Zillow estimates the housing deficit at 4.7 million units, despite new construction helping close the gap. That imbalance is why some regions continue to appreciate modestly while others slide. The split isn’t simply about demand—it’s whether a city has enough supply to absorb it. Where builders got ahead during the boom, values are now resetting. Where they lag, values are holding firm.
Sellers’ behavior also confirms the divide. In July, 27.4% of all listings nationwide had a price cut—the highest share since Zillow began tracking the metric in 2018. Those reductions are widespread in Southern and Mountain metros, where competition has cooled. Compare that to the Midwest, where homes are still selling closer to their initial list price. It’s another sign that sellers in some regions are facing much more challenging conditions than others.
The bigger question is whether this pattern is temporary—driven by short-term affordability pressure—or the start of a longer realignment where Midwest and Northeast markets steadily gain ground on the pandemic boomtowns. What happens next is closely tied to overall affordability, and that depends less on local supply and more on something buyers everywhere are watching: mortgage rates.
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Rates Are Lower, But Affordability Isn’t Fixed
So here’s the reality many buyers are running up against right now: rates may have eased from last year’s highs, but that hasn’t translated into meaningful relief on affordability. On paper, lower rates should equal lower monthly payments, yet Zillow’s research shows the typical household still struggles to make the math work. The barrier is more than just interest rates—it’s the relationship between income, prices, and borrowing costs.
Zillow has quantified the gap.
For a median-income family to afford the typical U.S. home, assuming a 20% down payment, mortgage rates would need to fall all the way to 4.43%. Today’s mid-6% range looks modestly better than last year’s near 8%, but it’s still nowhere close to that 4.43% threshold. And based on economic expectations, Zillow sees rates holding in roughly the mid-6% range through the end of the year, which makes the needed drop highly improbable.
To illustrate how deep the challenge goes, consider this: even if rates were hypothetically set at zero, many expensive coastal metros would still be unaffordable without huge down payments. In New York, Los Angeles, Miami, San Francisco, San Diego, and San Jose, costs tied to taxes, insurance, and maintenance already consume such a large share of household income that families are priced out before they even touch the principal payment. That shows clearly that the affordability crisis is not just about mortgage rates.
The contrast becomes even sharper when you compare those cities to parts of the Midwest and Inland South. In markets like Detroit, Cleveland, and Buffalo, and especially in Pittsburgh, families can still manage homeownership even at far higher rates. Zillow’s data suggests Pittsburgh remains affordable up to nearly 8.9%. That kind of resilience highlights the enormous regional divergence, where some metros have completely lost touch with local incomes while others remain within reach despite elevated rates.
Some buyers hold out hope that falling home prices could restore balance, but the numbers tell a different story. Zillow estimates home values would need to drop by roughly 18% nationwide to bring affordability in line with median incomes. A correction that steep would almost certainly come packaged with weaker income growth and higher unemployment—conditions that hurt households in ways that offset any benefit from cheaper prices. That’s why the prospect of affordability being solved by across-the-board value declines is not realistic.
Add it all up, and the message is that neither a slight dip in mortgage rates nor modest price cuts will close the gap for the typical family. The challenges remain structural, not temporary. And this raises another layer that buyers and policymakers alike are watching closely: the difference between home prices and what inflation reports say about housing costs, particularly rents.
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What Zillow’s Shelter Forecast Tells Us About the Future
Zillow’s shelter forecast gives a forward-looking view of where housing costs are headed, and it helps explain the split we’ve been seeing. The core issue is the way the Consumer Price Index measures housing. Instead of tracking only new leases, the CPI blends fresh rental agreements with renewals and existing contracts. That mix delays the data, which means official shelter inflation can stay elevated even though on-market rents are already slowing.
July’s numbers make this clear.
Owner’s Equivalent Rent rose 0.28% and rent of primary residence rose 0.26%. Those results were slightly off from expectations—OER a little below, rent of primary residence a little above—but they still point to a gradual cooldown compared to earlier in the year. In fact, since April, rent inflation has eased by more than a whole percentage point, and Zillow expects that deceleration to work its way into the CPI over time.
The forecasts are even more telling. Zillow projects OER to close the year up about 3.4%, then slow sharply to around 1.9% in 2026. For rent of primary residence, they see a 2.7% climb in 2025 before falling back to just 0.6% in 2026. That kind of slowdown would bring rent inflation nearly to a standstill within two years, something that would meaningfully shape inflation readings. A simple chart of this expected downtrend shows just how significant the shift could be.
At the same time, Zillow has revised down its outlook for actual market rents. In 2025, single-family rentals are projected to rise just 2.5%, while apartment rents creep up only about 1.0%. With many tenants already maxed out on what they can afford and new multifamily supply adding options in key metros, landlords have limited room to push rents higher. So the market now looks more like one of controlled, modest growth rather than the rapid spikes that stretched renters in the early 2020s.
This matters beyond the rental market itself. Housing costs are the most significant component of CPI, and if shelter inflation slows the way Zillow expects, the Federal Reserve will face less pressure to keep interest rates elevated. Easing shelter inflation lessens a major driver of overall inflation, which could allow for slightly more accommodative policy. But there’s an important distinction: even if the Fed gets breathing room, that doesn’t resolve the ownership side. High prices, limited incomes, and a persistent shortage of available homes still constrain homebuyers.
So while renters may see gradual relief in the form of slower increases and national inflation may look steadier, these improvements are not the same as actual affordability gains for buyers. The underlying shortage remains, and until supply expands meaningfully, ownership costs won’t realign with incomes. That reality sets the stage for the bigger conclusion about what it will take to fix housing affordability in America.
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The Clear Takeaway
Zillow’s research points to one clear takeaway: minor price cuts or modest rate moves won’t solve affordability. The only lasting fix is building enough homes to close the housing gap, and that will take years. In the meantime, national supply and demand imbalances will keep ownership challenging for many buyers.
For most people planning to stay in a home for the long term, two realities matter: affordability isn’t likely to improve quickly, and supply growth is a slow process. Real estate is local—use this guidance to evaluate your specific market, your budget, and the broader economy. If you expect a normal or long-term tenure, then you are much wiser to buy now than wait.
Is what you believe about the U.S. housing market actually true? I just spoke with Kevin Erdmann—and he challenges the most common assumptions with clear, educated insight. Check out the whole conversation now—you might be surprised what you’ve been missing.
