For the past two years, the story of falling home prices was largely a Sun Belt story — an unwinding of the pandemic-era land rush that had sent values in Austin, Tampa, and Phoenix to unsustainable heights. As recently as February, JPMorgan’s rosy national forecast was masking a “Sun Belt full of pain,” with Florida and Texas bearing the brunt. That regional narrative is now changing.
New data released Tuesday showed the S&P Cotality Case-Shiller 20-City Home Price Index fell 0.2% month-over-month in March on a seasonally adjusted basis, the second consecutive monthly decline. The annual pace of appreciation slipped to just 0.8%, and the three-month annualized rate — a cleaner read on momentum — collapsed to -0.2% from 2.3% the month prior.
More striking than the national numbers is where the weakness is now showing up. Los Angeles posted a 1.6% annual decline. Washington, D.C. turned negative. Both are now joining markets like Tampa (-1.9%) and Dallas (-1.7%) in the red. Capital Economics, which cut its full-year U.S. home price growth forecast to 1% from 3%, and North America economist Thomas Ryan wrote that the deterioration is “no longer just a Sun Belt story.”
The demand-side rot has been building for a while. Nearly 20% of new homes saw price cuts in the fourth quarter of 2025, concentrated in the South and West, Fortune reported in February, with Texas accounting for a disproportionate share of listings with price reductions. Even a brief dip in mortgage rates to below 6% failed to bring buyers off the sidelines, as January existing home sales cratered despite the momentary rate relief. The structural freeze runs deeper still: as Fortune reported, roughly 80% of mortgage holders are sitting on rates above the pre-2022 sub-4% threshold, leaving would-be sellers locked in and inventory stubbornly constrained.
The reset has arrived
The pain could deepen before it eases. The Case-Shiller index is based on home closings and uses a three-month rolling average, meaning the full effect of rising mortgage rates — which climbed to 6.4% in March and 6.5% in April amid conflict in the Middle East — has yet to be absorbed. Capital Economics’ Ryan wrote that he expects the impact to “become more visible around mid-year.”
The competing FHFA index offered a marginally brighter picture, rising 0.1% month-over-month, but a simultaneous downward revision to February’s reading kept its annual rate at a muted 1.7%. Neither measure suggests a market on solid footing.
At the start of the year, Fortune framed 2026 as “The Great Housing Reset” — a year in which home prices would eke out just 1% growth while incomes caught up. Capital Economics has now arrived at something very much like that forecast, but only after cutting from a more optimistic 3% projection following two straight months of declines. For homeowners in Los Angeles and Dallas who once felt insulated from the Sun Belt’s reckoning, the reset has arrived.
For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.
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