These housing markets are cooling the fastest – and Florida’s metro areas dominate the list

As the weather cools in late fall, so does the U.S. housing market, with Florida leading the nation among metro areas and experiencing the sharpest declines in home prices.

A recent one report from real estate analytics firm Cotality revealed that of the ten coolest markets in the US among the hundred largest metro areas, seven were in Florida.

Cape Coral, FL, a city of 32,000 known for its scenic canals, stood out for the largest year-over-year decline in Florida home prices in September – and the second highest decline overall, after Champaign, IL – with a decline of 7.1%.

Next on the list was Naples, FL, where home prices fell 6.7%, followed by Punta Gorda, FL (-6.2%), Sebring, FL (-5.2%), North Port, FL (-5.1%), Brownsville, FL (-4.8%), and Sebastian, FL, which rounded out the top 10 with a decline of 4.6%. Notably, Wichita Falls, Texas, and Kahului, HI, ranked eighth and ninth, respectively.

“These towns are largely retirement homes and places for second homes, so outside of tourism there aren’t many businesses or industry coming to these areas that generate jobs and keep the economy going, so wages are lower and there aren’t people moving to this area for jobs, and so less demand for owner-occupied and rental properties.” Cara Ameerbroker at Coldwell Banker Vanguard Realty in Florida, says Realtor.com®. “All this creates a perfect storm for a decline in property values.”

In August, a typical single-family home in hard-hit Cape Coral sold for $350,000, down nearly 7% from the year before, according to the latest available data analyzed by Realtor.com researchers.

Compared to August 2022 during the pandemic era, when mortgage rates near all-time lows and demand soared, the average home sales price in Cape Coral is down more than 13%.

Meanwhile, the typical North Port home sold for 20% less in August 2025 than it did three years ago.

Cape Coral continues to struggle

A mix of national and local factors have fueled Cape Coral’s downward trend, as rising home financings, higher insurance premiums and rising foreclosure rates curbed buyer interest.

The city’s location on the Gulf Coast makes it vulnerable to hurricane damage and flooding, making it both more difficult and expensive to obtain home insurance.

In fact, Cape Coral has the third highest premium-to-market ratio in the country at 2.2%. This metric measures how much a homeowner pays annually in insurance premiums relative to the market value of their home.

For example, the owner of a $350,000 home in Cape Coral would need to set aside $7,700 to cover his annual insurance premium.

Ameer says that while Florida has no state income tax, the savings are usually not great enough for lower-income residents to offset the rising costs associated with owning property in these coastal areas that are plagued by rising insurance costs and higher HOA and condo fees.

“Florida is starting to get skewed in property values ​​because of these types of shifts,” she says.

Separately, Cape Coral earned the dubious distinction of having the third-highest foreclosure rate among the 225 metro areas with a population of at least 200,000, according to the Report on the third quarter of 2025 by ATOMa curator of land, property and property records.

However, Karen Borellichairman of Royal Palm Coast Realtor Association and agent at John R. Wood Christie’s International Real Estate, tells Realtor.com that while the number of foreclosures and short sales in Cape Coral is up compared to last year, the data does not indicate “disaster is lurking on our horizon,” she says.

Coastal markets are seeing an overcorrection

But these numbers don’t paint the full picture when it comes to Florida’s distressed markets like Cape Coral, North Port and Naples. Experts and real estate agents agree that a major factor putting downward pressure on prices in those metros is the overcorrection due to the overheated pandemic years.

“Fast price growth, combined with increasingly expensive and difficult to obtain insurance, and rising mortgage rates, pushed many potential buyers out of these Florida markets,” says Realtor.com senior economic research analyst. Hannah Jones. “As affordability deteriorated, demand weakened and prices began to correct.”

In other words, as Borrelli puts it, the market “went too high, too fast,” causing many buyers to lose out, and it will take some time before they come back full force.

Prices in many Florida markets have fallen year over year since 2022, indicating they are undergoing a “rebalancing” as sellers look for a price that draws buyers back.

“This correction is likely to continue until demand becomes strong enough to stabilize prices,” the analyst said.

Borrelli points out that the cooling in Cape Coral’s housing market is limited to house prices, and not to the number of sales.

“The buyers are still coming here,” she says. “They’re still buying. Our sales are still going at almost the same pace year after year. What has cooled is the price. And now that the price is more affordable, it seems to be attracting just as many buyers.”

Borrelli adds: “It’s probably a really good time to buy.”

As for sellers in Cape Coral, the agent says they still have “unrealistic” price expectations that hark back to the red-hot COVID years.

“And so those homes tend to sit around because the buyers are looking for value,” Borrelli says. “They distinguish a house that is well priced from one that is overpriced.”

Sellers across Florida have responded to the sluggish interest from buyers in different ways, with some offering concessions, while others — especially in Miami — are choosing to delist and wait for better market conditions.

In the spring, around a third of all homes for sale in North Port, rated by Cotality as the sixth coolest market in the country, saw a price cut. Cape Coral was close behind with 28% of the mentions.

Looking ahead, Borrelli says she believes the fundamentals of the local housing market remain strong and prices will eventually find their footing.

“I think we’re getting to a point where the value of our homes is there, and people are seeing that value,” she says. “And as long as that remains the case, I see prices remaining stable.”