Housingโข Market Correction: Over Half of U.S. Homes Lost Value inโค Past Year,But โคexperts Predict Rebound
WASHINGTON – A critically importantโ shift is underwayโ inโ the U.S. housing market, with over half of American โhomes experiencing โa decline in value over โthe past year – the highest percentage since 2012. Despiteโ this downturn, experts maintainโค that aโฃ full-scaleโฃ crash is unlikely, and forecast a โขresurgence in sales and priceโ growth in 2026.
The cooling market โขreflects a correction following unprecedentedโฃ price surges over the past six years. Zillow data indicates that while a majorityโ of homes have seen value decreases,homeowners โฃare still largely in a positive equity position,with valuesโฃ upโ a median โค67% since their last sale.โฃ Currently, only 4.1% of homes โคhave lostโค valueโ since their last sale.โค this normalization โขis largely attributed too risingโ interest โrates implemented โby the Federal Reserve in 2022โ and 2023, which have discouraged homeowners with historically lowโ mortgage rates from selling.
“Homeowners may feel rattled when they seeโฃ their zestimate drop, and it’s more commonโ in today’s cooler market habitat than in recent years,” said Trehโค Manhertz, senior economic โresearcher โคat โZillow, โ”But relatively few are sellingโฃ at a loss.โ Home values surged over the past six years,and the vast majority of homeowners still have โsignificant โขequity. What we’re seeing now is a normalization, not a crash.”
The limited housing supply, coupled with elevated mortgage rates,โค has created a challenging environment for potential buyers. Demand has weakened, shifting the market advantage from sellers to buyers,โ leading to a surge in delistings as sellers withdraw their properties when faced with offers below their asking prices.
However, the National Association of Realtors (NAR)โ anticipates aโฃ turnaround. NAR Chief Economist Lawrence Yun predicted earlier this month that existing-home โsales willโ increase by 14% in 2026, following three years of stagnation,โ with new-home sales rising 5%.Thisโ increased โขactivity โฃis expected โขto support a 4% rise in โhome prices.
“Next year is really โtheโ year thatโฃ we will see a measurable increase in sales,” Yun stated at a conference on November 14. “Home prices nationwide are โขin no danger of declining.”
