Home Value Declines Spread, But Losses Since Last Sale Are Rare

Zillow’s October 2025 data shows a widespread turn in U.S. housing: 53% of homes have lost value over the past year—the highest share since 2012—with the deterioration concentrated in the West and South (Denver 91%, Austin 89%, Sacramento 88%, Phoenix and Dallas 87%); 4.1% of homes are now valued below their previous sale (1.6% more than 5% below), while only 3.4% of new listings are being brought to market below prior sale price (2.0% substantially so). Since the July 2022 peak the average drawdown is about 9.1%, but most owners still sit on large lifetime gains (median home bought 8.6 years ago is up ~67%), and the low incidence of discounted new listings suggests sellers are largely not being forced into fire sales. The result for investors is a locally uneven risk landscape—meaningful downside in pandemic‑boom metros and regional pockets, but limited systemic distressed supply for now unless labor or financing stress intensifies.

Analysis

Zillow's October 2025 metrics show a broad deterioration in U.S. home values: 53% of homes declined year-over-year, the highest share since April 2012, up from 16% a year earlier. The weakness is concentrated in the West and South where 49 of 64 major metros have majority declines; Denver (91%), Austin (89%), Sacramento (88%), Phoenix and Dallas (87%) are the most affected metros.

Measured against transaction history, 4.1% of homes are now valued below their last sale price and 1.6% are more than 5% below that prior sale; since the July 2022 peak the average drawdown across homes is 9.1%. At the same time the median home in Zillow’s sample was bought 8.6 years ago and shows a 67.2% gain since purchase, indicating large lifetime equity cushions for many owners.

Only 3.4% of new listings are priced below prior sale (2.0% substantially), implying sellers are not yet forced into discounted sales and distressed supply is limited. The data points to a locally uneven downside risk set—acute in pandemic-era boom metros—while systemic distress remains muted absent sharper labor-market or financing stress; sentiment toward Zillow (Z, ZG) is mildly negative and market-impact is modest (0.35).

Key Decisions for Investors

• Reduce or avoid concentrated long exposure to housing assets and equities tied to West/South pandemic‑boom metros (e.g., Denver, Austin, Sacramento, Phoenix, Dallas) until local pricing and listing dynamics stabilize
• Monitor leading indicators—share of new listings priced below prior sale, weekly listing inflows, and regional mortgage stress—as a trigger to increase defensive positioning if discounted listings begin to rise materially
• Favor strategies that hedge localized housing downside (short regionally concentrated homebuilders/REITs or use put protection) while maintaining exposure to assets tied to longer-term home equity resilience
• Watch Zillow (Z, ZG) data releases and sentiment for early signals of listing behavior and price momentum, given mildly negative sentiment and the company’s role as a primary data supplier