Half of Major Metros See Home Values Fall as Price Cuts Hit Record 27.4%

​​The housing market is officially split down the middle. 

According to a new Zillow’s latest market report, home values are now rising in half of the nation’s major metros and falling in the other half. Buyers are gaining leverage in more markets, homes are sitting longer before going under contract, and sellers are cutting prices at record levels. 

But affordability (or lack thereof) is still keeping many buyers on the sidelines.

Byron Lazine broke down the numbers in today’s Hot Sheet. 

The National Split

Zillow data shows a clear divide across the country. Out of the 50 largest metros, 25 saw year-over-year price growth while 25 saw declines.

Midwest and Northeast metros are leading the way with modest growth:

1. Cleveland: +4.7%
2. Hartford: +4.5%
3. Louisville: +3.9%
4. Detroit: +3.8%
5. Buffalo: +3.7%

Southern and Western metros are seeing the steepest drops:

1. Tampa: -6.2%
2. Austin: -6.0%
3. Miami: -4.6%
4. Orlando: -4.3%
5. Dallas: -3.9%

The regional divide reflects both affordability and builder activity. In the Midwest and Northeast, limited new construction and tighter supply are keeping prices afloat. 

In the South and West, stronger builder activity has given buyers more options and created downward pressure on prices.

Buyers Gain Leverage, But Can’t Fully Use It

Zillow’s latest market heat index shows that 27 major metros are now balanced or in buyers’ favor, up from 24 last month. 

Buyer competition is at its lowest point for any July since at least 2018.

Homes are also sitting longer. The typical listing that went under contract in July did so in 24 days, six days slower than last year. The median age of all for-sale homes hit 60 days, the longest for any July in Zillow’s data history.

But higher costs are preventing many from acting. As Zillow senior economist Kara Ng explained:

“Perhaps more than ever, whether it’s a good time to buy depends on where you live. A defining trait of this market is that buyers are gaining leverage that most of them can’t use, because cost barriers are too high. Buyers forced to the sidelines means less competition for those who can still afford it. Affordability is gradually improving where builders have been able to keep up with demand, showing why continuing to build is so critical. It’s not just about giving buyers power, it’s enabling them to use it.”

Price Cuts at Record High

Sellers are adjusting to shifting demand by cutting prices. In July, 27.4% of listings saw a price cut, the highest share since Zillow began tracking this metric in 2018.

Cuts are most common in the South and Mountain West, where new construction has given buyers more options. In contrast, sellers in the Northeast and on the West Coast are under less pressure, thanks to tighter supply and stronger seller conditions.

The Affordability Squeeze

Even with some local price relief, affordability remains the biggest hurdle. 

National home value growth is nearly flat, up just 0.2% year over year. As for monthly mortgage payments, they’re down by $19 compared to last year, but they remain about $1,000 higher than before the pandemic.

For those who can afford to buy, conditions are improving. There’s less competition, more negotiating room, and more sellers willing to cut prices. But for many households, affordability barriers are keeping the dream of homeownership out of reach.

Closing Takeaway

The U.S. housing market is sharply divided. Half of the nation’s largest metros are seeing price gains, while the other half face declines. 

Sellers are cutting prices at record rates, homes are sitting longer, and buyers are gaining leverage in more markets. 

But the ultimate deciding factor is still affordability. Until costs come down meaningfully, many buyers will be left on the sidelines, watching from a distance as the market slowly shifts in their favor.