More than half of U.S. homes have experienced a decline in value, according to a Zillow report published in 2025. This marks the largest share of depreciating properties since 2012, with 53 percent of homes seeing a decrease in their valuations compared to the previous year. The average drop has been recorded at 9.7 percent from peak prices. This downturn in home values can be attributed to several factors including increased costs, elevated mortgage rates, and broader financial pressures affecting potential buyers. The report notes that the rental market conditions have changed as affordability issues create barriers for prospective homeowners, leading to a slowdown in demand. Metro areas such as Austin, Texas have been particularly hard-hit, with home values plummeting by an average of 20.5 percent compared to their peaks. Other regions following suit include New Orleans (15.9 percent decline), San Francisco (14.8 percent), and Pittsburgh (13.2 percent). Areas that witnessed a surge in demand during the pandemic, such as Denver, also report significant drops in home values, with 91 percent of properties experiencing a decline compared to peak valuations. Despite these challenges, Zillow conveys a sense of reassurance, indicating that most homeowners still retain a considerable amount of equity. Since their last sale, home values have increased by a median of 67 percent, and only 4.1 percent of homes were valued lower than their last sale. This is more favorable than the 11.2 percent recorded before the pandemic, and while there has been an uptick from 2.4 percent in 2024, it’s clear that most homeowners have not been forced to sell at a loss. Economic experts, including Treh Manhertz from Zillow, suggest that while the decline in property value can be disconcerting for homeowners, it is part of a broader normalization process following years of rapid growth in home values. Redfin’s Chen Zhao analyzed these ongoing market dynamics, pointing out that a reduction in fresh supply combined with lower demand continues to impact the housing market, restricting potential sales. As affordability pressures prevail and mortgage rates creep up, many buyers are remaining on the sidelines, causing a pronounced slowdown in market activity. However, experts also point to the possibility of stabilization as mortgage rates begin to ease.