5 Cities Where Home Prices Are Set To Fall

Most reputable forecasts project home values will rise modestly nationwide in 2025, but one new analysis has identified five markets that are at high risk of seeing falling home prices this year.

Provo, UT, is at the greatest risk of declining home prices over the next 12 months, according to CoreLogic’s latest Market Risk Indicator report.

The other high-risk metro areas named in the report are Tucson, AZ; Albuquerque, NM; Phoenix; and West Palm Beach, FL.

CoreLogic, a real estate analytics firm, assesses a 70% or greater probability that home prices will fall in these five markets this year. The projection takes into account various factors including economic conditions, housing supply, and demand dynamics specific to each area.

It’s no coincidence that the five markets at the highest risk for price declines are all in the Sun Belt, which saw explosive price growth during the post-pandemic boom, but is now facing a correction in some markets as demand cools and inventory piles up.

“Home prices have remained flat since the housing market began seeing slower activity this past summer. Bifurcation across markets has also persisted,” says CoreLogic Chief Economist Selma Hepp.

“Northeastern markets drove appreciation growth due to low inventories of homes for sale while Southern markets readjusted to higher inventories and increases in variable mortgage costs, such as taxes and insurance,” she adds.

In Provo, the median list price for homes on the market last month was $566,375, according to Realtor.com® economic research team data. That was down 1.4% from a year ago, but still up 38% from January 2020.

Home list prices were down in January from a year earlier in each of the five top at-risk markets named by CoreLogic, ranging from a 1.9% drop in Tucson to a decline of 10% in Florida’s Palm Beach County.

Still, home prices continued to grow nationally over 2024, with CoreLogic estimating that home prices increased about 4.5% for the year.

The company projects national home prices will rise an additional 4.1% annually through December 2025.

“Going forward, with inventories slowly improving and mortgage rates remaining elevated, forecasts suggest a smaller overall increase in prices in 2025,” says Hepp.

That is roughly in line with the Realtor.com economic research team’s projection that U.S. home prices will grow by 3.7% through 2025.

Sales of previously owned homes are projected to tick up to 4.07 million, a 1.5% gain from this year, but still sluggish compared with the 2013–19 historical average of 5.28 million, as high mortgage rates continue to weigh on buyer demand.

Mortgage rates have hovered near 7% since the beginning of the year, and are unlikely to decline significantly in the short term.

The Federal Reserve has paused cuts to its short-term policy rate following a mix of strong economic data and policy outlook from the Trump administration that is seen as inflationary.

“We think the window for further Fed interest rate cuts has closed, so mortgage rates should remain near their current 7% level this year, before a little more relief arrives in 2026,” said Thomas Ryan, North America economist for Capital Economics, in a recent client note.

“Slightly stronger demand should counter rising inventory, ensuring continued house price growth,” he added, projecting home price growth of 4% through 2025.