- Zillow’s Market Heat Index shows double-digit drops in buyer activity in 10 major Sunbelt cities.
- San Antonio, Memphis, and Jacksonville are among the fastest-cooling real estate markets in 2025.
- Home price growth in the U.S. slowed to just 1.2% year-over-year as of March 2025.
- Buyers have more power with price cuts, contingencies, and less competition.
- Sunbelt markets are shifting due to slowed migration, rising interest rates, and increased supply.
Housing Market Deals: Are Sunbelt Cities Cooling?
The once red-hot Sunbelt housing markets that dazzled buyers during the COVID-19 pandemic are now leading the pack in a national housing market cool-down heading into 2025. Fueled by rising mortgage rates, increasing inventory, and a moderation in buyer demand, cities like San Antonio, Memphis, and Jacksonville—once overwhelmed by frantic bidding wars—are feeling the freeze. According to the latest Zillow Market Heat Index, these are now cooling markets, offering new kinds of real estate deals and flipping the script for frustrated buyers and cautious investors. We spoke with Las Vegas expert Steve Hawks for insight on how this trend plays out locally and why it could offer once-in-a-decade opportunities in America’s top changing cities.
Understanding Zillow’s Market Heat Index
The Zillow Market Heat Index is one of the industry’s main real-time indicators when looking at trends in the local housing market. This tool measures buyer activity by looking at
- How fast homes sell after they are listed
- How many homes are for sale compared to how many buyers are looking
- How many days homes are on the market
- How much homes sell for compared to the asking price
The index typically ranges from 0 to 100. Higher numbers mean a competitive market for sellers, and lower numbers mean the market is cooling down or favors buyers.
When you see a drop in a market’s Heat Index, this usually shows buyers aren’t as interested. Homes start sitting longer, price cuts become more common, and fewer multiple-offer situations happen. For analysts, buyers, and sellers alike, understanding how the Market Heat Index changes gives important insight into what the market is doing and where it’s headed.
The Housing Market in 2025: From Bidding Wars to Negotiation Tables
The national real estate market in 2025 is notably calmer than in the frenzied days of 2021–2022. Over the past year, home prices haven’t grown as fast.
- According to the National Association of Realtors, U.S. home prices saw just a 1.2% year-over-year increase by March 2025.
- That stands in stark contrast with the explosive 10%+ growth we saw during the pandemic housing boom.
- More homes are for sale, with new homes being built and fewer buyers competing.
- Homes are staying on the market longer, from just 15 days in 2021 to over 35 days in many cities.
Sellers who once expected offers well above listing price are now changing how they sell. They are often offering extras and accepting lower prices than they hoped for. This change has given buyers more power. In some cities, it’s creating a chance to buy that hasn’t been there in five years.
Top 10 Cooling Markets According to the March 2025 Heat Index
Zillow’s March 2025 Market Heat Index highlights several major cities where buyer demand has dropped the most over 6 months
- San Antonio, TX: -23.5 points
- Memphis, TN: -23.1 points
- Jacksonville, FL: -22.9 points
Most of these cities grew very fast when people moved during the pandemic. Now, they’re showing clear drops in buyer interest and how fast homes sell. For people looking to buy a home or invest, this data shows new real estate deals are appearing as markets start to balance out.
What Cooling Really Means: A Shift in Buyer/Seller Power
In hot housing markets, sellers keep their power when negotiating. But as the market cools, that power begins to change. Here’s what that change looks like in real terms
- Most homes for sale now stay on the market for weeks instead of days.
- Bidding wars aren’t common anymore.
- Sellers offering extras—like paying buyer closing costs or paying for a lower mortgage rate—are becoming more widespread.
- Prices being cut are going up steadily, sometimes by 5–10%.
- Standard conditions like inspections and getting a loan are being accepted again.
This market, which favors buyers, lets people make choices based on a plan, not because they are desperate. For many people buying their first home or moving up, the cooling trend is the first time they can really negotiate on price since before the pandemic.
Sunbelt Cities Losing Heat: Why the Slowdown?
Sunbelt states like Texas, Florida, North Carolina, Arizona, and parts of Alabama saw millions of new people move there between 2020 and 2023. Buyers were drawn by warm weather, relatively low taxes, and affordable housing—until prices went up too much.
So, why did this change happen?
Homes Cost Too Much During the Pandemic
Many Sunbelt cities saw home prices rise too fast because people were investing hoping for big gains and moving for remote work. According to Redfin, nearly one third of buyers in hot markets during the pandemic now owe more than their home is worth or would just break even if they sold.
Interest Rate Pressure
As the Federal Reserve raised interest rates through 2023 and 2024 to fight rising prices, mortgage rates went above 7%. This made homes too expensive for many buyers, especially in cities where prices had already gone up too fast.
Migration went back to normal
As rules for working from home changed or ended, the big move of people that helped Sunbelt cities grow slowed down. Fewer people moving in meant fewer buyers.
More Homes for Sale
Homebuilders started building more homes when demand was high. Now, with new homes ready to sell as demand drops, many cities might have too many homes, pushing prices lower.
Sunbelt cities aren’t broken; they’re just going back to how things were.
Las Vegas Housing Market: Comparative Analysis
While Las Vegas got a big boost when people moved there during the pandemic, it has held up better during the 2025 cooldown than other Sunbelt cities.
Steve Hawks, who has been a Las Vegas real estate expert for a long time, notes the following
- There aren’t many homes for sale locally, especially in desired areas.
- Prices stopped going up so fast, but they haven’t gone down.
- Homes are staying on the market a bit longer, but this doesn’t mean the market is collapsing.
- What the market is doing is helped by jobs in different areas and tourism coming back.
Hawks observes: “While markets like Memphis or Jacksonville are changing fast, Vegas does well because of key things that are unique there—not much land, good infrastructure, and steady population growth.”
He warns buyers not to assume that what’s happening in San Antonio or Jacksonville is happening in all warm cities.
Why This Cooling Might Offer Hidden Opportunities
If you’re ready to buy when others aren’t sure, a cooling market can be great. Here’s how
- Lower Purchase Prices: Homes in areas that were selling fast are starting to be 5–15% cheaper than they were at the highest point.
- Power to Negotiate: Fewer offers means you have more room to make a deal that works for you.
- Less Competition for Inspections: Buyers can once again make choices based on checking everything carefully.
- Buying Strategy: Buying homes for a bit less than they were trending can mean they are worth more later when the market is balanced again.
This market is good for buyers with cash ready, who aren’t in a rush, and who know what’s happening locally.
Market Conditions to Watch Before Jumping In
You shouldn’t just jump into buying in a cooling market. Look at these important signs
- Inventory Trends: When there are a lot more homes for sale, it means buyers aren’t as interested.
- Active vs. New Listings: See how fast homes sell after they are listed.
- Employment Growth: Cities where new jobs are being made keep needing housing.
- Population Movement: When more people move into a city than move out, it helps the housing market stay strong over time.
- Rent-to-Price Ratio: How much rent is compared to the price of the home: This is important for investors figuring out if the monthly rent will pay for the mortgage and costs.
- School Ratings & Amenities: These things keep people wanting to buy homes, even when the market is slow.
Always look at the basics of the market, not just the prices.
Case Study: San Antonio and Jacksonville
San Antonio, TX
- The Heat Index dropped a lot, by 23.5 points.
- 18% more homes are for sale than last year.
- Prices haven’t gone up, and homes are taking more than 40 days to sell.
- Sellers are being more flexible and offering deals to buyers who are serious.
Jacksonville, FL
- A 22.9-point drop on the Heat Index.
- After climbing 40%+ in under three years, it’s now hard for people to afford homes.
- People living there aren’t making enough money to keep up with home prices, so fewer new buyers are looking.
- Investors who bought homes in 2021–2022 are waiting to see what happens, not sure if they’ll make money soon.
These two cities show clearly how fast the market is cooling down and how it gives buyers more power.
What This Means for Real Estate Investors
Investors who waited while the market went crazy in 2021–2022 might finally find a good time to buy.
Good places to buy in cooling markets
- Memphis: Rent is high compared to the price of the home, and people always need rentals.
- Mobile: Homes are affordable, and there’s a chance prices will go up a little.
- Phoenix: It’s cooling now, but the basics that help it grow over time are still good.
Ways for investors to buy in 2025
- Buy homes and keep them for a long time to make money from rent.
- Buy homes for a low price in neighborhoods that have problems or too many homes, but could get better.
- Pick homes to fix up and sell in smaller cities where prices are dropping a little.
You still need to do your homework—there are chances to buy, but not everywhere.
Advice from Steve Hawks: How to Handle a Cooling Market in Las Vegas
Steve Hawks says to look closely at what’s happening in specific neighborhoods
“In Southern Highlands and Summerlin right now, homes are selling for 5–7% less than they were at the highest point. This is bringing in buyers who are careful but serious, and they know that prices going down won’t last.”
He also tells buyers to work closely with local agents who have been doing this a while and know about homes that aren’t listed publicly or deals that happen without hitting the market. This is something people often miss when the market is slow, and it looks like there are lots of homes for sale, but good ones are still hard to find.
Buyer and Seller Checklists for 2025
For Buyers
- Check Zillow data for how many days homes are on the market in different areas.
- Use comparable listings to find neighborhoods where prices seem to be softening.
- Include home inspection and appraisal conditions in your offer.
- Use tools to figure out if renting or buying makes more sense in the long run.
- Lock in your mortgage rate early—rates can still change a lot.
For Sellers
- Get a professional opinion on what your home is worth before listing it.
- Offer to help pay for a lower mortgage rate to attract buyers who care about rates.
- Make the home look good inside and out to compete with all the other homes for sale.
- Be open to different terms—what’s happening in the market is different now.