A recent MarketWatch report flagged something worth paying attention to: home prices are now falling in at least 13 states — and buyers in those markets are gaining real negotiating power for the first time in years.
If you have a VA loan benefit, this matters more than you might think.
What’s Actually Happening in the Housing Market
The national housing market is splitting in two directions.
Many of the housing markets seeing the most softness — where homebuyers have gained the most leverage — are located in Sun Belt regions, particularly the Gulf Coast and Mountain West. Many of these areas saw significant price surges during the pandemic housing boom, with home price growth that outpaced local income levels.
Meanwhile, home prices are still climbing in many regions where active inventory remains well below pre-pandemic 2019 levels, such as pockets of the Northeast and Midwest.
Price declines have been concentrated in Western and Sun Belt markets, led by Miami (-4.3%), Denver (-3.2%), and Phoenix (-2.3%). These areas experienced rapid price acceleration earlier in the cycle, leaving them more exposed as borrowing costs rose.
At the state level, Florida fell furthest at -2.5%, followed by Texas (-1.71%), Arizona (-0.89%), Colorado (-0.85%), and Hawaii (-0.82%).
This isn’t a crash. It’s a correction — and it’s creating a window.
Why This Shift Is Happening
Higher policy rates weighed on both demand and supply. Current homeowners were reluctant to move and give up their lower locked-in rates, which kept prices elevated even as buyer demand softened.
But inventory has been slowly climbing back. National active listings rose 8.1% between March 31, 2025 and March 31, 2026. Some seller’s markets have turned into balanced markets, and more balanced markets have turned into buyer’s markets.
More homes for sale plus softer demand equals sellers who need to negotiate. That’s the leverage the MarketWatch article is talking about.
What This Means If You Have a VA Loan Benefit
Here’s where most people miss the real opportunity.
The VA loan is the only major loan program that allows you to:
- Buy with zero down payment
- Have no private mortgage insurance (PMI)
- Ask sellers to cover closing costs up to the VA’s 4% concession limit
In a market where sellers are already motivated, that combination is powerful. You’re not just buying a home — you’re negotiating from a position of strength with a loan that costs less out of pocket than almost any other option available.
In markets where prices have pulled back — like parts of Texas, Florida, Colorado, and Arizona — a VA buyer can potentially:
- Negotiate the purchase price down
- Request seller concessions toward closing costs
- Get into a home that was out of reach 18 to 24 months ago
And if rates drop in the future, the VA IRRRL (Interest Rate Reduction Refinance Loan) allows you to refinance with no appraisal required in most cases.
The States Where Buyers Have the Most Leverage Right Now
Based on data from MarketWatch and corroborating reporting from ResiClub Analytics and the Zillow Home Value Index, the states seeing the most notable softening include:
- Florida — highest state-level price decline, elevated inventory throughout the state
- Texas — price pullbacks in Houston, Dallas, and Austin
- Arizona — Phoenix down over 2% year-over-year
- Colorado — Denver down over 3% year-over-year
- Hawaii — Honolulu posted an 8.1% decline, the steepest of any major metro tracked
To put that in perspective: home prices in the Hartford, CT metro are now 21.2% above their 2022 peak, while home prices in the Austin, TX metro sit 27.8% below their 2022 peak. That’s not a typo.
For a VA buyer eyeing Texas, that’s a very different conversation than it was two years ago.
What Buyers Should Watch Out For
A softer market doesn’t mean every deal is a good deal. A few things to keep in mind:
1. Falling prices don’t fix high rates.
Your monthly payment is still driven by your interest rate. A lower purchase price helps, but it doesn’t replace the math on a 6.5–7% rate. Run the numbers with your loan officer before assuming a deal is a deal.
2. Some markets are still tight.
Nationally, we’re still 13.6% below pre-pandemic 2019 inventory levels, and resale markets in much of the Midwest and Northeast remain relatively tight. If you’re shopping in a low-inventory market, buyer leverage is limited regardless of what national headlines say.
3. VA appraisals still matter.
The VA protects you with a Minimum Property Requirements (MPR) appraisal process. If a home is distressed or overpriced relative to comps, the VA appraisal will flag it. This is a feature, not a bug — it protects you from overpaying in a market where pricing can be inconsistent.
4. Don’t wait for the perfect bottom.
Timing the market precisely is nearly impossible. When it comes to home prices, it can be hard to judge when markets have actually peaked and when they’ve bottomed. What matters more is whether the home works for your life and your numbers today.
The Bottom Line
The MarketWatch report puts real data behind what a lot of buyers are starting to feel: there’s more room to negotiate in today’s market than there has been in years — especially in Sun Belt and Mountain West states.
If you have VA eligibility and you’ve been sitting on the sidelines, this is the window worth paying attention to. The VA loan gives you tools that no other buyer has. In a market where sellers are more flexible, those tools matter even more.
Source: MarketWatch, “More leverage: 13 states where home prices are falling and what homebuyers should know now.” Supporting data: ResiClub Analytics, Zillow Home Value Index, The Mortgage Reports.