Housing demand drops in cities popular during the pandemic remote work era

The once-booming Sun Belt Zoomtowns, such as Austin, Tampa, Phoenix, and Atlanta, where pandemic-driven remote workers flocked, are now seeing a decline in housing demand, according to a new report from real estate analytics firm Parcl Labs.

During the pandemic, the Sun Belt saw record migration and housing demand, sending prices soaring by 50% or more in some areas. Builders rushed to meet demand. The South’s housing stock grew by 3.3 million units from 2020 to 2024.

However, as interest rates rose and return-to-office mandates kicked in, migration slowed and the region became oversupplied. Cities like Austin have seen home prices fall over 23% from their 2022 peaks, and listings have surged.

In contrast, Midwestern and Northeastern cities such as Buffalo, Cleveland, Milwaukee, and Detroit are thriving.

Nationally, domestic migration to the South is down 38%, while migration to the Midwest is up 60%, reversing pandemic-era trends.

Many homeowners are locked in by low mortgage rates, and fewer people are quitting jobs or relocating. Several sellers in southern metros are slashing prices to attract buyers, while sellers in the North enjoy scarcity-driven leverage.