After a period of record-breaking home value growth, the pendulum has swung — leaving U.S. homeowners nervous about going underwater.
In Zillow’s latest analysis, researchers found that 53 percent of U.S. homes’ Zestimates have declined from their peak, the highest level seen since 2012. The average drawdown (i.e., the peak-to-trough decline of an asset) has increased over the past three years, rising from 3.6 percent in Spring 2022 to 9.7 percent in Fall 2025. Although concerning, Zillow noted the current average drawdown is close to pre-pandemic rates and well below the 2012 average drawdown of 27 percent.
Zillow Senior Economic Researcher Treh Manhertz said these statistics reflect a normalizing market and show that the vast majority of homes are retaining their value, even as the rate of appreciation cools.
“Homeowners may feel rattled when they see their Zestimate drop, and it’s more common in today’s cooler market environment than in recent years. But relatively few are selling at a loss,” he said in a written statement. “Home values surged over the past six years, and the vast majority of homeowners still have significant equity.”
When examining the change in value between sales, the outlook is brighter, the report said.
In October, 4.1 percent of homes were valued lower than when they were last sold — a slight gain from last year (2.4 percent). A little more than three percent of homes were also listed below the previous sale price, an increase from 2.1 percent in 2024. However, the median home value increase since the last sale, which, for the typical homeowner, is 8.5 years, is 67 percent.
That increase is even higher in supply-constrained metros along the coasts, with homeowners in Buffalo, New York (108 percent); San Jose, California (97 percent); Providence, Rhode Island (95 percent); Columbus, Ohio (90 percent); and San Diego (88 percent) experiencing the most significant gains.
Meanwhile, homeowners in San Francisco (14 percent); Austin, Texas (13 percent); San Jose, California (9 percent); San Antonio (8 percent); and Dallas (7 percent) are more likely to list below what they paid, reflecting the shift in demand since the early stages of the pandemic.
Providence, Rhode Island; Milwaukee and Cincinnati were in the middle, with all having fewer than 1 percent of new listings priced below their last sale. Thirteen other metros across the Northeast, Great Lakes region, South and Midwest have fewer than 2 percent, the report read.
“What we’re seeing now is a normalization, not a crash,” Manhertz said.
