Home Values in the West Drop for 9th Straight Month—These Metros Saw Steepest Declines
Julie Taylor
Fri, January 9, 2026 at 5:20 PM EST
5 min read
“Go West, young man,” the old saying goes—and it’s far cheaper to do so than it once was.
For nine months in a row, home values have declined in the West.
In December, median list prices in the region were down 1.8% year over year, according to the Realtor.com® December 2025 Monthly Housing Trends report.
"Affordability pressures stemming from elevated mortgage rates and higher living costs have weighed on housing demand across the West," says Hannah Jones, senior economic research analyst at Realtor.com.
There are 13 states that make up the Western region: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
"Higher borrowing costs continue to limit purchasing power, particularly in already high-priced Western metros," says Jones. "At the same time, rising inventory has eased some of the scarcity that previously fueled rapid price growth, giving buyers more choice and reducing upward pressure on prices."
Price softening has been more pronounced in the West than in other regions largely because of its higher starting price point, according to Jones.
"Many Western metros, such as California’s coastal cities and parts of the Mountain West, entered this period with significantly higher home values compared to other regions, making them especially sensitive to higher interest rates," she says. "As a result, buyer resistance has intensified relative to more affordable regions like the South."
California home to three metros with steepest declines
In California, home prices fell year over year by 6.7% in San Diego, 5.9% in Oxnard, and 5.5% in San Jose.
"In these California markets, strained affordability has reduced the pool of eligible buyers, easing demand and relieving some price pressure," says Jones.
Southern California agent Marcy Roth of Douglas Elliman says, "In the pockets where we've seen declines, I believe that is a case of the buying exuberance that happened during the low-interest rate environment. Now we have seen some of those properties coming back on, and sellers are either barely breaking even or taking a hit."
Joel Berner, senior economist at Realtor.com, agrees. "Prices are still recovering from the pandemic," he says. "There were overinflated prices in those regions, and we're just kind of seeing a correction."
But some sellers haven't gotten the memo, according to Northern California real estate agent Tia Hunnicutt, founder of Proxima Realty Group.
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"In the San Francisco Bay Area, sellers are largely unaware of price declines and continue to be dead-set on selling 'for more than their neighbor did,'" she says.
Phoenix and Denver also took a price hit
Elsewhere in the West, Phoenix home prices saw a 3.5% drop, while Denver prices slumped 3.4% year over year in December.
"These markets have seen prices soften as growing inventory intersects with cooling demand," says Jones.
In Phoenix, real estate agent Stacy Miller of Re/Max Fine Properties says investment companies like BlackRock have purchased large numbers of affordable homes and converted them into rentals. As a result, first-time buyers of all ages are struggling to find affordable homes in the neighborhoods they want, while builders are finding it difficult to keep pace with demand.
When builders do deliver new homes, their incentives are often so attractive that resale properties can’t compete. "This is forcing longer days on market, less negotiating power for sellers and price reductions, and seller concessions given to buyers," says Miller.
In Denver, real estate Jim Merrion of Coldwell Banker Realty says, "As Colorado has become the most expensive state outside the East and West coasts, our prices, coupled with high interest rates, have greatly stifled buyer activity."
Merrion says a majority of homeowners have sub-4% interest rates on their homes, reducing their urge and motivation to sell. "Buyers see the same homes for sale week after week, so they are in no hurry to buy, and they typically want to offer less than asking," he adds.
Denver real estate agent Stacie Staub, CEO and co-founder of West + Main Homes, also says the seasonal slowdown has something to do with the lower prices.
"Denver is a city with real seasons, and our real estate market annually reflects this," she says. "This fall going into winter has been no exception. We have experienced a regular seasonal slowdown as expected, and with fewer transactions, we also see bigger jumps in data, including average listing price like we saw in December."
Falling prices ripple through Western states
Other Western states are increasingly feeling the impact of price declines as well.
Washington real estate agent Ledeana Strand says the price softening there doesn't come as a big surprise. "We had several years of rapid appreciation, and once mortgage rates jumped, buyers became far more payment-conscious," she says. "Even a small change in rates can dramatically affect what people can comfortably afford each month."
More listings have also come on the market compared with the ultra-tight conditions seen a couple of years ago, Strand says.
"This gives buyers more options and less urgency, which naturally puts pressure on prices, especially for homes that aren't priced or presented well," she says. "Some sellers still have expectations rooted in the peak market and are testing higher prices, while others are adjusting quickly and pricing strategically from the start. Homes that hit the market at the right number are still moving, while overpriced listings tend to sit."
Nevada real estate agent Robert Little of Re/Max Advantage tells Realtor.com, "Like in most markets, buyer demand slowed when interest rates rose sharply in 2022, but our market has held up better than many parts of the country."
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