Home Prices Drop in 27 States as Market Correction Spreads Beyond Sun Belt

The U.S. housing market has entered a decisive turning point. Zillow just reported monthly home value drops in 27 out of 50 states, marking a dramatic expansion beyond the isolated Texas and Florida downturns that dominated early 2025 headlines.

This widespread correction validates earlier predictions, though with a twist. While Realtor.com forecasted April 2025 would mark peak home prices for the year, the decline has arrived faster and broader than most analysts anticipated.

The Data: Sharp Monthly Declines Signal Momentum Shift

Florida leads the correction with a -0.55% monthly decline in Zillow's seasonally-adjusted value index—annualizing to a staggering -6.6% yearly pace. Colorado follows closely at -0.54%, with California, Washington, and DC rounding out the top five declining markets.

The acceleration is unmistakable. In Florida, while trailing 12-month values show modest growth, the annualized monthly decline rate exceeds -6.6%, indicating the downturn is gaining speed rather than stabilizing.

Zillow's updated forecast projects home values will fall 1.4% in 2025, revised from an earlier 1.9% decrease prediction. Meanwhile, Redfin economists expect a 1% decline by Q4 2025, with the median U.S. home price turning negative year-over-year for the first time since 2012 (excluding a brief 2023 dip).

Rising Inventory Meets Falling Demand

The price pressure stems from a fundamental supply-demand imbalance. Total inventory surged 16.7% year-over-year to five-year highs, while existing home sales dropped 1.1% in April. The typical home now takes 40 days to sell—five days longer than last year.

"A lot of people selling right now bought in 2021 or 2022, when home prices were near their height," explains Corey Stambaugh, a Redfin Premier agent. "Those sellers face reality once their home has been sitting for a couple weeks without any offers."

Nearly half of today's sellers are offering concessions—just shy of record levels. Buyers targeting homes on market for several weeks can negotiate below list price and request mortgage-rate buydowns or repair credits.

Regional Variations Create Opportunities

While 27 states show monthly declines, the Northeast and central Midwest remain relatively stable. Colorado has "rocketed up the charts" as a correction leader, while unexpected states like Hawaii, Tennessee, and Montana join the decline list.

This geographic dispersion suggests we're witnessing a broad market recalibration rather than isolated regional corrections. For investors and agents, the key isn't whether prices will drop, but identifying where declines are accelerating and by how much.

The Silver Lining: Improving Affordability

With home prices forecasted to decline 1% while incomes rise approximately 4%, affordability will improve modestly. Combined with 7% mortgage rates keeping monthly payments elevated, this creates a complex decision matrix for buyers.

The takeaway? Active buyers should leverage today's negotiating power rather than waiting for further declines. As Chen Zhao, Redfin's head of economics research, notes: "The sooner you buy, the sooner you start to build equity."