China’s real estate market exhibits distinct, tier-differentiated dynamics. Although property prices have continued to decline across all city tiers, the pace of depreciation has moderated in Tier 1 cities, whereas Tier 2 and 3 areas remain subject to more pronounced price adjustments. This analytical note aims to analyze the underlying causes of the real estate downturn and assess the likely timing of recovery across different tiers. The note finds the impact of supply shocks—proxied by inventory—is more pronounced in lower-tier cities. Indeed, continued declines in real estate prices appear more likely in lower-tier cities. Going forward, region-specific and tier-differentiated policies will be increasingly important to stabilize the real estate market.