The number of U.S. homes on the market in April reached more than 959,000, up 30.6% from a year earlier. At the same time, monthly home sales declined 3.2% year over year. These contradictory statistics are the latest sign that the U.S. housing market may be heading for a correction, according to an analysis by First American Properties, a real estate investment and development company.

First American found that home prices in the U.S. have retreated from their peak in 47 of the nation’s largest metro areas, including San Francisco in the West and the Sun Belt’s Austin, Texas, where both cities have seen home prices fall nearly 10%. The Southeast, which has been a high-growth area in recent years, is also seeing prices fall, with many cities down nearly 10% from recent peak levels.

“The U.S. housing market is no longer in the high-flying territory we’ve seen over the past few years,” said Michael Esienga, CEO of First American Properties, in a press release. “What we’re seeing now, particularly with rising inventory and declining pending sales, are the early signs of a correction already playing out in several markets.”

The Midwest and Northeast have so far avoided major price declines, but that may not last forever. Eisenga points out that the Midwest tends to offer more stable prices for homes. But since 2019, prices have surged in this region as well, with Madison, Wis., seeing a 35% gain, and Milwaukee jumping by 160%.

“These figures raise serious questions about long-term affordability and market balance,” Eisenga said in the statement.

The price gap between new and existing homes has also narrowed from an average of $64,000 in the fourth quarter of 2022 to $14,600 in the first quarter of 2025. First American found that when factoring in rate buydowns, closing cost credits and other buyer incentives that are not apparent in the purchase price, the gap may disappear altogether.

According to the National Association of Home Builders, new home prices have declined year over year for eight consecutive quarters. Eisenga maintains this is a trend that has historically preceded past housing corrections.

“When we examine historical patterns of housing downturns, the trajectory we’re on aligns closely with previous deep national corrections,” Eisenga said. “That’s something buyers, sellers and investors need to keep in mind as we move further into 2025.”