The pandemic housing boom that turned Florida and Texas into the hottest real estate markets in America is officially reversing course. According to new forecasts from Zillow and Realtor.com, home prices are expected to fall in 22 of the nation's 100 largest metropolitan areas in 2026—and the list reads like a who's who of pandemic-era boomtowns.

The Cities Facing the Biggest Declines

Florida dominates the list of markets expecting price drops, with several cities forecast to see corrections of 5% or more:

  • Cape Coral, FL: -10.2% (the largest expected decline in the nation)
  • North Port, FL: -8.9%
  • Tampa, FL: -4.8%
  • Jacksonville, FL: -3.2%
  • Orlando, FL: -2.7%

Texas isn't far behind, with Austin leading the Lone Star State's correction:

  • Austin, TX: -0.5% (continuing its multi-year softening)
  • San Antonio, TX: -1.1%
  • Houston, TX: -0.8%

California's Central Valley also appears on the list, with Stockton expecting a 4.1% decline.

"Many of these cities experienced massive run-ups during the pandemic boom and remote-work migration peak. The correction is driven by elevated inventory levels, high mortgage rates dampening demand, affordability constraints, and high property taxes."

— Housing Market Analysis

Why the Sun Belt Is Struggling

The factors driving price declines in these markets form a perfect storm of headwinds:

1. The Remote Work Reversal

During the pandemic, millions of workers fled expensive coastal cities for more affordable Sun Belt destinations. But as return-to-office mandates have taken hold, many of those migrants have returned to their original locations—or at least stopped moving south.

2. Soaring Insurance Costs

Florida homeowners have watched insurance premiums explode, with some seeing costs triple or quadruple in recent years. In many cases, the annual insurance bill now rivals the property tax payment, making the true cost of ownership far higher than the sticker price suggests.

3. Climate Risk Repricing

Investors and insurers are increasingly pricing in climate risks, from hurricanes in Florida to extreme heat in Texas. Properties in flood zones or fire-prone areas are seeing valuations adjust downward as these risks become harder to ignore.

4. Inventory Surge

After years of historically tight supply, these markets are now seeing inventory levels normalize—and in some cases, exceed pre-pandemic norms. More supply means less competition and more negotiating power for buyers.

The National Picture: Modest Growth Overall

Despite the regional pain, the national housing market remains relatively stable. Zillow forecasts national home values will rise approximately 1.2% in 2026—modest growth that barely keeps pace with inflation. Realtor.com projects 2.2% nominal growth, which translates to a slight decline in inflation-adjusted terms.

The divergence between struggling Sun Belt markets and resilient coastal cities is creating a tale of two housing markets:

Markets Expected to See Gains:

  • Buffalo, NY: +4.8%
  • Hartford, CT: +3.9%
  • Providence, RI: +3.5%
  • Boston, MA: +2.1%

The Northeast, long dismissed as too expensive and over-regulated, is suddenly looking like a relative safe haven.

What This Means for Buyers and Sellers

For Buyers in Declining Markets:

Patience is finally paying off. If you've been priced out of Florida or Texas markets, 2026 may offer the best buying opportunity since before the pandemic. Expect more inventory, fewer bidding wars, and sellers willing to negotiate.

However, be cautious about:

  • Insurance costs that may not be immediately apparent
  • HOA fees and special assessments
  • Climate-related risks that could affect long-term value

For Sellers in Declining Markets:

If you've been considering selling, the window for pandemic-era prices has likely closed. Properties that sit on the market too long risk multiple price cuts and a reputation as "stale listings"—which Florida and Texas lead the nation in.

For Investors:

The rental market in these areas remains relatively strong, as high mortgage rates keep potential buyers renting longer. But be prepared for property value declines that could offset rental income gains.

The "Great Housing Reset"

Redfin has dubbed 2026 the beginning of the "Great Housing Reset"—a yearslong period of gradual normalization following the pandemic distortions. It won't be a crash, but it won't be the boom times either.

Affordability is expected to improve as income growth (projected at 3.6%) outpaces home price appreciation (1-2%). Combined with slowly declining mortgage rates—most forecasters expect rates to average around 6.3% in 2026, down from current levels—monthly payments should become slightly more manageable.

For the 22 cities facing price declines, the reset is already underway. The pandemic boom is giving way to a more balanced market—and for buyers who've been waiting on the sidelines, the opportunity they've been hoping for may finally be arriving.