Several East Coast housing markets that have enjoyed steady price gains over the past two years now face conditions that could push values lower within the next 12 months. National home prices rose 4.0 percent year over year and 0.7 percent from late 2024, according to the latest federal data, but that broad upward trend masks growing vulnerabilities in specific metro areas along the Atlantic seaboard. A combination of softening demand, rising inventory, and persistent affordability strain is converging in ways that suggest corrections are not just possible but increasingly likely in at least five cities.
National Price Growth Hides Regional Cracks
The headline numbers look reassuring on the surface. The Federal Housing Finance Agency reported that U.S. house prices rose 4.0 percent over the prior year and gained 0.7 percent from the fourth quarter of 2024. The FHFA House Price Index, which tracks repeat sales on properties financed with conforming mortgages, serves as the government benchmark for gauging appreciation trends at the national and state level. But averages can be misleading. A 4.0 percent national gain can coexist with flat or declining prices in individual metros, especially when local conditions diverge sharply from the national picture.
That divergence is exactly what is emerging along the East Coast. While Sun Belt construction has surged, adding supply that puts downward pressure on prices in parts of the South, several Northeastern and Mid-Atlantic cities face a different problem: prices that climbed too fast relative to local incomes, paired with mortgage rates that remain high enough to sideline a significant share of would-be buyers. The result is a growing pool of listings sitting longer on the market, a classic early signal that sellers are losing pricing power.
Why These Five Cities Are Vulnerable
The cities most exposed share a common profile. They experienced sharp appreciation during the pandemic-era buying frenzy, they have relatively high costs of living that amplify the impact of elevated borrowing costs, and they are now seeing inventory climb from historically low levels. The five metros that fit this pattern most clearly are New York, Boston, Philadelphia, Baltimore, and Washington, D.C. Each has distinct local dynamics, but the underlying math is similar: when prices outrun wages and rates stay elevated, the market eventually recalibrates.
This is not a prediction of a crash. A correction typically means a pullback measured in single-digit percentages, enough to restore some balance between buyers and sellers without triggering the kind of distress seen during the 2008 financial crisis. The distinction matters because the current cycle lacks many of the riskiest features of that era, such as widespread subprime lending and heavily leveraged speculation. What it does have is a straightforward affordability problem that has been building for years and is now reaching a tipping point in these specific markets.
New York: Affordability Hits a Wall
New York’s housing market has long operated under its own gravitational rules, but even this market is not immune to the math of affordability. Median prices in the broader metro area climbed aggressively through 2024 and into 2025, outpacing wage growth in most boroughs and surrounding counties. The gap between what homes cost and what local incomes can support has widened to a point where buyer pools are shrinking. Listings in outer boroughs and suburban ring communities are spending more days on market, and price cuts are becoming more frequent…