The United States housing market is showing signs of a significant shift, as median home prices are declining in several major counties. A new report from real estate data firm ATTOM highlights price drops in populous areas across New York, California, Florida, and Texas, even as overall housing affordability continues to worsen for the average American.
This cooling trend in specific markets comes after a period of sluggish sales, offering potential relief for some homebuyers. However, rising inventory and increasing seller price cuts paint a complex picture of a market grappling with high interest rates and strained household budgets.
Key Takeaways
- Median home prices have decreased year-over-year in five large U.S. counties, including New York County (Manhattan) and Sacramento County.
- Despite localized price drops, national housing affordability has worsened in 259 of 580 counties analyzed in the third quarter of 2025.
- An increase in housing inventory and a rise in delistings suggest sellers are facing pressure in a market that is slowly tilting in favor of buyers.
- Experts attribute the price adjustments to varying local factors, such as increased housing supply in Southern markets and decreased demand in areas like Manhattan.
Five Major Counties See Home Prices Decline
According to a comprehensive Home Affordability Report by ATTOM, several of the nation's largest counties experienced notable year-over-year decreases in median home prices. This data indicates a potential turning point in markets that previously saw relentless price growth.
The analysis identified five key areas where prices have softened:
- New York County, NY (Manhattan): Down 3%
- Sacramento County, CA: Down 3%
- Contra Costa County, CA: Down 3%
- Hillsborough County, FL: Down 2%
- Harris County, TX: Down 1%
These figures, supported by Realtor.com® data on summer median list prices, signal that market dynamics are beginning to change. The adjustments provide a glimpse into how regional economic pressures are influencing local real estate values.
Underlying Factors Driving Price Adjustments
The reasons for these price drops vary significantly by region. Experts point to a combination of increased supply, waning demand, and a ceiling on what buyers can afford as primary drivers of the trend.
Hannah Jones, a senior economic research analyst at Realtor.com, explained the divergence. "Falling home prices are a result of more home listings or a different mix of home types available," she noted. "In Southern markets, like Harris County and Hillsborough County, more inventory is softening the market and letting home prices fall."
In contrast, the situation in New York is different. "In New York County, inventory is stable year over year, suggesting that falling demand could be driving home prices lower," Jones added.
Affordability Reaches a Breaking Point
The pressure on buyers is immense. Mike Brun, CEO at Estate Shutter in Hillsborough County, has observed the affordability challenge firsthand. "Rising mortgage rates combined with soaring insurance and HOA costs forced sellers to adjust," Brun said, indicating that the total cost of ownership has reached a limit for many potential buyers in his area.
This sentiment is reflected in national data. ATTOM's report found that the typical monthly cost for homeowners, including mortgage, insurance, and taxes, was $2,123 in the third quarter of 2025. While this figure is stable from the previous quarter, it represents a 6% increase from the same time last year.
A Closer Look at the New York City Market
While New York County, which comprises Manhattan, saw a 3% median price drop, local real estate professionals caution against expecting widespread bargains. The market there is highly segmented, and overall prices have remained largely flat for a decade.
"Across the board, median closing prices in Manhattan haven’t moved much in 10 years," said Jacob Wood, a real estate broker with Coldwell Banker Warburg. He clarified that specific property types, such as studios or ground-floor units, have "categorically decreased in value."
Wood also pointed to other unique pressures in the Manhattan market, including stringent financial requirements for luxury co-op buildings that deter even wealthy buyers. Furthermore, he noted that "post-COVID supply-line issues and tariff-related cost volatility have negatively affected the value of homes requiring significant renovations."
Jules Garcia, an agent with Coldwell Banker Warburg, warned buyers about unrealistic expectations. "The notion that they [buyers] can get this amazing deal or 'every buyer can catch a unicorn' is false in most cases," Garcia stated. "Buyers should appreciate that they are aiming to purchase in one of the most competitive and therefore expensive markets in the world."
Sellers Under Pressure as Inventory Grows
Nationally, the housing market is tilting, creating new challenges for sellers and opportunities for buyers. The national median list price was $429,990 in August, unchanged from the previous year. This stagnation is forcing sellers to adapt.
Price Reductions on the Rise
A significant indicator of seller pressure is the increase in price cuts. The Realtor.com August 2025 Monthly Housing Market Trends Report found that 20.3% of all listings had their prices reduced during the month.
At the same time, housing inventory is growing. August marked the 22nd consecutive month of inventory growth, with active listings surpassing 1 million for the fourth month in a row. More choice for buyers naturally leads to more competition among sellers.
Another sign of seller frustration is the sharp rise in delistings, which occur when a property is pulled from the market without a sale. According to Realtor.com, delistings were up 57% year over year in July, outpacing inventory gains. Economists interpret this as a sign that many sellers are unwilling to lower their prices to meet current buyer expectations.
What This Means for Homebuyers
For those looking to purchase a home, the current environment presents a unique window of opportunity. With more homes for sale and sellers more willing to negotiate, buyers have regained some leverage.
Rob Barber, CEO of ATTOM, offered a balanced perspective on the impact of mortgage rates. "The drop in mortgage rates will help some buyers keep pace with the rising cost of homes,” he said. However, he cautioned that "more favorable loan rates could also enable prices to keep rising and further extend this two-and-a-half-year streak we’re in of homes being less affordable."
Real estate agent Jules Garcia suggests that determined buyers should act now, before a potential drop in interest rates brings sidelined buyers back into the market and reignites competition.
"This is where buyers, who’ve identified a property that can work for them, should pounce!" Garcia advised. "We are not yet at that breakneck seller’s market we might expect when rates come down even further." The current intersection of rising inventory and seller adjustments may offer the best negotiating power buyers have seen in years.
