Natural diamond prices have fallen to record lows, losing more than half their value over the past five years. The average price for a 1-carat natural diamond is now $3,898, representing a 51% decline from $8,007 in 2021, according to Rapaport Group data [1]. The Diamond Standard Index, which tracks investment-grade diamond prices, reached its lowest level ever at 2,490 in early August 2026 and was hovering just above 2,500 this week [1].
The sharp decline is attributed to a supply glut of mined diamonds, with excess inventory from overproduction during the Covid years persisting through 2023 and 2024. Efforts to clear this oversupply are ongoing, but the market faces additional pressure from the rapid rise of lab-grown diamonds [1]. Lab-grown diamonds, which are chemically and physically identical to natural stones, are significantly cheaper. For example, a nearly colorless lab diamond with excellent cut can be purchased for $450, compared to $2,800–$3,200 for a natural diamond of similar specifications [1]. Man-made stones can be priced up to 90% lower than their mined equivalents, depending on size, cut, and color [1].
This price disparity has led consumers, especially those seeking engagement and fashion jewelry, to favor lab-grown diamonds. Engagement rings featuring lab-grown center stones accounted for 61% of all engagement ring sales in 2025, a 239% increase since 2020, according to The Knot 2026 Real Weddings Study [1]. The lab-grown diamond market is projected to grow to nearly $92 billion by 2034, more than tripling from $29.46 billion in 2025, based on Fortune Business Insights [1].
Industry voices caution against viewing diamonds as financial investments. Cory Schifter, owner of Casale Jewelers, advised, "You shouldn't be buying a diamond thinking that there's a financial investment [aspect] to it" [1].
CONCLUSION
The natural diamond market is experiencing significant downward pressure due to oversupply and the rapid adoption of lab-grown alternatives, which are much more affordable. With lab-grown diamonds capturing a majority share of engagement ring sales and projected to see substantial market growth, the outlook for natural diamond prices remains negative. Industry experts warn consumers not to expect financial returns from diamond purchases.