Over half of US homes saw values drop, but few owners face real losses, according to Zillow
The United States housing market saw a major change over the past year, with 53% of homes losing value—the highest proportion since 2012, according to new research from Zillow.
While the headline figure may unsettle homeowners and industry professionals alike, most owners remain well ahead on their investment, and forced sales remain rare.
“Homeowners may feel rattled when they see their Zestimate drop, and it’s more common in today’s cooler market environment than in recent years. But relatively few are selling at a loss,” said Treh Manhertz, senior economic researcher at Zillow.
“Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we’re seeing now is a normalization, not a crash.”
Home value declines most widespread in the West and South
The downturn has been most pronounced in the West and South, with metros like Denver, Austin, Sacramento, Phoenix, and Dallas seeing 87% or more of homes lose value year-over-year.
On the other hand, the Northeast and Midwest have largely avoided widespread declines, with only a handful of metros—such as Minneapolis and Des Moines—seeing a majority of homes lose value.
Despite the recent drop, the typical homeowner remains in a strong position. Nationally, the median home value has increased 67% since the last sale, which for most owners was about eight and a half years ago.
Even in markets with steep recent declines, long-term owners have generally seen substantial appreciation.
“Among homes with sales records in Zillow data, the median home was last purchased 8.6 years ago and has experienced a 67.2% increase in value since that sale,” the report found.
Few sellers forced to accept losses
While 4.1% of homes are now valued below their last sale price—up from 2.4% a year ago—this remains below pre-pandemic levels.
Only 3.4% of new listings are priced below their previous sale price, and the share of homes down substantially (more than 5%) from their last sale price is just 1.6%.
Even in metros with the largest declines, such as San Francisco and Austin, most sellers are not being forced to accept losses.
Normalization, not crisis
The current environment reflects a normalization after years of rapid appreciation, rather than a systemic downturn.
Most homeowners have locked in low mortgage rates and built up significant equity, providing a cushion against short-term market turbulence.
While the recent dip in home values has been widespread, the vast majority of US homeowners remain in a strong equity position.
The market’s cooling signals a return to more typical conditions, rather than a repeat of the last housing crisis.
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