Home price growth has slowed to 0.9% in December 2025, but most markets are only seeing a slowdown.
Annual home price growth of less than 1% is one of the softest rates since the post-Great Recession recovery, according to a new US home price report from data research firm Cotality.
“We are seeing a significant slowdown in the rapid increases of recent years; although upward pressure on prices remains, the momentum has eased enough to suggest the market is becoming more accessible to buyers,” said Cotality’s chief economist. Selma Heppsaid the report.
The South and the West are hit hard. Here, negative depreciation is the norm. Florida, Texas, Colorado, Washington, DC, Hawaii, Arizona, Utah, Oregon, and California saw the largest declines in Cotality’s Home Price Index (HPI), which predicts a metro’s vulnerability to recession by analyzing multiple market segments and 45 years of home price trends using proprietary statistical models.
Cooler markets with sharper HPI declines are Kahului-Wailuku, HI; Victoria, TX; Wichita Falls, TX; Napa, CA; Naples, FL; Punta Gorda, FL; Cape Coral, FL; North Port, FL; Rome, GA; and Sebastian, FL.
Punta Gorda also saw the largest equity percentage decrease of -7.97%, with an average price of $26,624.
Why are home prices falling?
Much of that is due to higher inventory levels and a slowdown in migration to previously fast-growing markets, the report said.
During the times of the COVID-19 pandemic, mortgage rates are at historic lows, and urban dwellers are rushing to many of these now approaching or collapsing markets — especially Florida and Texas — as they look for more space and fewer restrictions, pushing prices up to unsustainable levels.
Those markets are now seeing a tough correction, especially in Florida. The Sunshine State takes half the spots on the list.
Cotality calls the decline “a long-awaited return to normality driven by economic and housing fundamentals. Fierce bidding wars and double-digit price increases in recent years have created a market environment where buyers and sellers must gradually adjust their expectations.”
In Florida, this is already happening.
“As sellers lose their power in this area, they become more realistic in their pricing,” agent Douglas Elliman. Michael Merrillwho works in Vero Beach, tells Realtor.com®.
Even as billionaires flock to the government for friendly tax policies, the average resident struggles with losing equity over high (albeit stabilizing) housing costs.
“The reason [Florida] “homes that have lost value are higher inventory, less migration to the area, and sellers are overestimating houses,” he adds. Brendan Rendoreal estate consultant at Real Estate Bees serving Central Florida.
The Sunshine State takes all of the top five markets that face the greatest risk of continued decline in the future: Cape Coral, Lakeland, North Port, Palm Bay, and West Palm Beach, which have seen an influx of top developers.
Two Texas cities in the top three markets are seeing tough adjustments: Victoria and Wichita Falls.
Los Angeles real estate investor Jameson Tyler Drewwho saw an exodus of residents from California to Texas during the pandemic, says many people—current and potential residents—are upset about the Lone Star State because it’s no longer as affordable as it used to be.
“Texas’ luster seems to be waning as quickly as prices have risen over the last few years,” he told Realtor.com. “People I’ve talked to have higher property taxes than California, and their commutes are getting longer and longer. Now, people from California are just going straight to the Midwest.”
He names Milwaukee, Indianapolis, and Chicago as places where California transplants are looking for affordable pastures. Others are looking to cheaper areas in the Golden State, including Fresno and Bakersfield-Delano.
Hawaii and Napa in the fall?
A few unexpected metros—both pricey and known for their beauty—had two steep HPI declines: Kahului-Wailuku, HI (No. 1), and Napa, CA (No. 4). They have median list prices of $1,049,500 (down from $1.42 million in August 2023) and $1,304,500 (down from $1.79 million in June 2023), respectively.
In January, 10% (188 listings) and 11.6% (56 listings) of listings in Kahului-Wuiluku and Napa, respectively, dropped prices, according to Realtor.com data.
Cotality’s chief economist, Thom Maloneexplains that the HPI decreases in these two desirable markets with the cost of home insurance.
“Hawaii’s insurance costs skyrocketed after the 2023 fires, and Napa is a similar story, with most of the region considered to be at very high risk for wildfires,” he told Realtor.com.
“Price reduction is necessary to compensate the consumer [rising] insurance costs, as the attractiveness of the areas has not changed otherwise.”
Kahului-Wailuku, HI
Percentage drop in HPI: 8%
Median list price: $1,049,500
Victoria, TX
HPI percentage decline: 7.4%
Median list price: $276,100
Wichita Falls-TX
HPI percentage decline: 7.2%
Median list price: $199,575
Napa, CA
HPI percentage decline: 7.1%
Median list price: $1,304,500
Naples, FL
HPI percentage decline: 6.8%
Median list price: $729,725
Punta Gorda, FL
HPI percentage decline: 6.2%
Median list price: $384,750
Cape Coral, FL
HPI percentage decline: 6.2%
Median list price: $399,949
North Port, FL
HPI percentage decline: 5.9%
Median list price: $479,900
in Rome, GA
HPI percentage decline: 5.2%
Median list price: $296,950
Sebastian, FL
HPI percentage decline: 5.2%
Median list price: $442,725
