When will home prices drop? Where they are already falling.

U.S. housing is cooling: the typical home sat on the market 64 days in November 2025 (up three days year‑over‑year and nine days from 2022) as Realtor.com reports annual price declines in 28 of the 50 largest metros and the Census Bureau shows Q2 median home price fell to $410,800 from $423,100 at the start of the year. Supply is loosening — active inventory rose 12.6% year‑over‑year and 18% of listings saw price cuts last month — but overall inventory remains below pre‑pandemic levels and many owners are reluctant to sell while holding ~3% mortgage rates, limiting a large surge in listings. Forecasts point to a gradual slowdown in price growth (Fannie Mae’s HPI projects year‑over‑year growth easing from 2.5% today to 1.3% by end‑2026), implying slowly improving affordability, though regional divergence is pronounced (e.g., San Diego down >5% while parts of the Northeast still show gains).

Analysis

Realtor.com data show the typical U.S. home sat on the market 64 days in November 2025, three days longer year‑over‑year and nine days longer than 2022, while 28 of the 50 largest metros posted annual median price declines. Census Bureau figures indicate Q2 2025 median home price was $410,800, down from $423,100 at the start of the year; active inventory rose 12.6% year‑over‑year and 18% of listings had price cuts in November.

Regional divergence is pronounced: San Diego prices are down by more than 5% and median days on market have lengthened, yet parts of the Northeast remain positive (Hartford +5.6%, Pittsburgh +4.3%), and more than half of listings across the 50 largest metros are seeing price reductions. Many owners remain reluctant to list because they hold ~3% pandemic mortgages, which constrains a large rebound in supply despite rising active inventory.

Forward-looking signals point to a gradual cooling rather than a crash: Fannie Mae projects year‑over‑year home price growth to slow from 2.5% this quarter to 1.3% by end‑2026, implying slowly improving affordability. Tactical buyer strategies in the article—buy with an eye to refinance, target condos or modular builds that can cost 10–20% less—are consistent with a market where rates are moving down slowly and price weakness is uneven across metros.

Key Decisions for Investors

• Reallocate geographic exposure: overweight metros showing price resilience (Northeast examples) for long positions and selectively pursue acquisition opportunities in metros with >5% declines where days‑on‑market and price‑cut rates give buyer leverage
• Adopt a buy‑with‑refinance playbook for direct purchases or residential allocations — prioritize smaller units, condos or modular homes (10–20% lower cost) to build equity now and refinance if rates decline
• Use three monitoring triggers before increasing housing risk: a sustained decline in mortgage rates, continued active inventory growth beyond current +12.6% YoY, and a falling share of listings taking price cuts
• For sellers or development exposure, assume longer marketing times (typical 64 days) and a higher likelihood of price reductions; defer significant new‑supply expansion until mortgage‑rate driven demand shows clear recovery