10 cities where home prices are set to decline the most over the next 3 years with real-estate values overinflated, according to Moody’s

• Moody’s economists expect US home prices to fall by around 4.5% in the years ahead.
• But some markets will see worse declines than others amid low affordability and inflated values.
• Home prices in cities like Provo, Utah and Clarksville, Tennessee will fall most, Moody’s says.

Some housing markets in the United States are in for a rough few years.

According to Matthew Walsh, a housing economist at Moody’s, national home prices will fall by about 4.5% in the near future, following a 40% increase since 2020. However, some metropolitan areas will experience even steeper declines.

Walsh shared with Insider Moody’s projections for markets where home prices are expected to fall the most in the coming years, based on several factors including a valuation model. Annualized growth rates are projected from August 2023 to August 2026.

“This model basically identifies areas where home price appreciation is out of sync with what economic fundamentals would otherwise suggest,” Walsh wrote in a follow-up email. “Those are the places that we would expect to see a greater reduction in prices when demand wanes — like when mortgage rates make housing less affordable for buyers and many postpone their search.”

The ten cities with the worst growth prospects, according to Moody’s, are listed below. We’ve also included Redfin median home price data for each market, as well as how each market ranks on Moody’s valuation model. A score greater than 10 indicates that a market is overvalued, according to Walsh.

Click here to see the ten markets where Moody’s expects the highest home price growth over the next three years.