Data from Realtor.com shows that existing home sales are slowing down. The typical home for sale spent 62 days on the market in September 2025 — a full week longer than this time last year. You might be wondering: If the housing market is cooling, does that mean home prices are dropping? The answer depends on various factors, particularly on where you’re shopping for a home.
By many markers, home prices are, indeed, going down. The Federal Housing Finance Agency’s House Price Index shows a 0.1% decline in home prices between June and July (the latest data available), and Realtor.com’s September report shows annual price declines in 33 of the nation’s biggest 50 metros. Another four cities saw no year-over-year median price changes.
According to the U.S. Census Bureau, the median home price in Q2 2025 was $410,800 — down from $423,100 at the beginning of the year. Housing inventory is also improving, which bodes well for home prices in the coming months. (More houses on the market means less competition, which typically means sellers need to lower prices to win buyers.)
Realtor.com’s data shows that the total active inventory of homes for sale increased by 17%% between September 2024 and September 2025, and nearly 20% of listings saw a price cut last month.
Still, the national housing inventory is lower than before the pandemic, and it’s unlikely we’ll see a huge jump in listings until mortgage rates fall. Even as home loan rates have been gradually decreasing, many current homeowners are still reluctant to give up the 3% mortgage rates they secured early on in the pandemic.
Most forecasts call for home price growth to slow steadily over the next year. Fannie Mae’s Home Price Index, which measures year-over-year price growth, projects a fall from 2.8% this quarter to just 1.1% by the end of 2026. This could mean a boost in affordability for buyers across the nation.
But if you want or need to buy a home before those declines come to fruition, choosing your market carefully can be a great way to snag a good deal.
For example, in San Diego, housing prices have fallen almost 5% in the last year, and the typical home is sitting on the market for nine days longer than it did in September 2024. Well over half of the listings in the 50 largest metro areas are experiencing price cuts.
Here’s a look at some other markets where home prices have fallen:
Prices aren’t dropping everywhere, though — the fact that housing costs are down in 33 of the 50 largest metro areas means that prices are stagnant or increasing in 17 of the largest cities. The Northeast is the main U.S. region with home prices still rising. For example, median home prices in the Pittsburgh metro area are up 6.3%, and prices in Providence, R.I., are up 4.8% since last September.
Waiting on more inventory or lower mortgage rates isn’t the only way tos to buy a home affordably.
Here are a few strategies to consider if you see homeownership in your not-so-distant future.
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Buy with an eye on refinancing. You could get into the market today with a home in your price range and look to refinance down the line. While you might get less house for your budget, you can start building equity. When rates come down, you can refinance your mortgage to a lower rate or even a different type of mortgage loan altogether.
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Start small. While it might not be your dream home, you could find housing happiness in today’s market by purchasing a condo or buying a lot and putting a tiny house on it. Both home types can cost considerably less than a single-family home and help you build equity that translates to cash when you’re ready to upsize.
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Go modular. No, these aren’t mobile homes. Modular homes are those that look just like a single-family home when constructed. The only difference is that they’re built in modules off-site and assembled when they get to your lot. They can also cost 10% to 20% less than a traditionally built home.
It may be good to buy a house in 2026 because, according to industry forecasts from Fannie Mae and the Mortgage Bankers Association, interest rates will probably gradually decrease by then. Home price growth is expected to slow too.
Typically, house prices will fall when supply exceeds demand, and sellers need to lower prices to entice buyers. As of September 2025, home supply was increasing, but inventory in the Midwest and Northeast had not yet caught up to pre-pandemic numbers.
If your finances are in order and it’s the right stage of your life, it could be a smart time to buy a house. Interest rates have stubbornly remained elevated, but they aren’t at sky-high levels. Home price growth has also slowed down, with many markets even seeing price declines in recent months.
Laura Grace Tarpley edited this article.
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