Biggest home price corrections are hitting markets that overheated most during the pandemic

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Among the nation’s 100 largest metro area housing markets, no major market saw greater home price appreciation during the Pandemic Housing Boom than Austin, TX—where home prices surged a staggering 72.5% between March 2020 and June 2022. Since the boom fizzled out three years ago, Austin has also experienced the largest home price correction (-26.0%) among those same 100 major markets.

Austin being among the hardest-hit markets isn’t surprising. 

Back in May 2022, I wrote an article for Fortune outlining Austin’s heightened downside risk this cycle, driven in part by the fact that the market had significantly overheated and become markedly overvalued relative to underlying fundamentals, including local incomes.

Put simply: The bigger the local boom, the greater the potential for a local bust. Three years on, that rule of thumb has proven to be a useful guide for the post-Pandemic Housing Boom period.

For today’s article, ResiClub analyzed how much home prices rose during the Pandemic Housing Boom between March 2020 and June 2022 and examined how they correlate with the shift in home prices since the 2022 peak. We looked at just the nation’s 100 largest metro areas by population.

The finding?

There’s a moderate statistical correlation (R² = 0.37) between home price shift between March 2020 and June 2022 and the change in home prices from their 2022 peak through the end of October 2025. If the New Orleans metro—the largest outlier—is excluded, that correlation strengthens slightly (R² = 0.44).

Our statistical analysis suggests that the U.S. housing market, to a degree, is experiencing a classic partial mean-reversion cycle. The markets that overshot the fundamentals the most during the 2020–2022 frenzy generally gave back more ground afterward.

It makes sense: Housing markets where prices rose too high too fast—and became increasingly detached from local incomes and income growth—were more likely to experience a sharper demand shock once the boom ended. That was especially true in markets where the run-up had been fueled by an influx of higher-income out-of-state buyers during the Pandemic Housing Boom, a source of demand that could also roll over.

In statistical terms, an R² of 0.37 means that about 37% of the variation in how local home prices have performed since 2022 can be explained by how hot they ran during the pandemic frenzy. (When we ran a similar analysis in August using Q2 2022 overvaluation scores, we arrived at a similar result: R² = 0.27.)

Of course, other factors are at play. This coming weekend, ResiClub PRO members will receive a more in-depth research article exploring the other variables driving today’s regional home price variation across the country.

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