This year, the property market displayed trends that were markedly different from what we’ve seen over the last five years.
Home price growth hit the brakes. Interest rates remained elevated along with non-mortgage expenses like insurance and property taxes. Migration slowed across the board, and there was a generational divide in destinations for those who did move. Persistent inflation kept interest rates high and stalled home sales.
The result was fragile homebuyer sentiment. But 2026 has the potential to provide relief and reignite the housing market.
Cotality’s economy team took a look back at this year’s major trends to see how they might influence the market next year.
2025 was a year of recalibration for the property market. Policy, prices, and and migration patterns all saw gradual change that has set the stage for 2026, a year which Cotality experts expect to bring increased stability in transaction volumes and prices. However, structural issues stemming from policy changes and rapidly rising costs will put pressure on the market’s recovery.
“Our housing market isn’t going to be rebalanced by next year, or even into 2027,” explains Cotality Chief Economist Dr. Selma Hepp. “It will happen slowly and gradually. As mortgage rates settle near 6% and more typical market conditions start emerging, buyers and sellers will start to see signals that inspire confidence in a system that has historically been the great wealth-creation engine of the U.S.”
Minimal home price gains in 2025
Data source: Cotality, 2025
Real home prices declined in 2025. Cotality data shows that the average price gain was only 1.8% for the year, which is significantly under the rate of inflation. Next year, our experts expect real prices to remain mostly flat, which has the potential to improve affordability.
But small national gains could hide big regional differences. The Northeast remains resilient thanks to its job market and geographic concentration of affordable — and accessible — metro areas for workers. On the other hand, previously popular areas in the Sun Belt and West are seeing a glut of new listings as more for-sale homes arrive on the market, which is holding down price growth in these areas.
Home sales expected to rise 7% in 2026
Data source: Cotality, 2025
While prices are softening and inventory is rising, buyers aren’t biting. This is especially true in areas like Florida and Texas where sales were strong during the pandemic. In-migration to these states has stagnated. Without an influx of new buyers, demand and price growth will remain limited in 2026.
However, this dynamic does leave an opening for investors. Investor activity picked up in 2025, with this class of buyers now representing about one-third of all single-family home purchases.
Share of homes bought by investors
Data source: Cotality public records data, 2025
Affordability will remain another major concern in the year ahead. However, homeownership affordability is no longer confined to principal and interest payments. Non-mortgage costs like insurance, utility bills, and property taxes are increasingly weighing on homeowners. In 2025, these costs jumped 30%, and there is little sign that this growth will slow down.
Not all states will feel the pressure equally though. Insurance premiums are straining states where natural disasters have long been part of the fabric of life. Florida and Colorado both recorded escrow payment increases of 55% and 57%, respectively. And Cotality forecasts that insurance premiums across the country will rise 8% to outpace inflation in 2026.
2025 escrow share out of the total monthly mortgage payment
Data source: Cotality, 2025
This increase may be one of the biggest risks for 2026. Cotality data shows that where property taxes and insurance costs are rising fastest, there has been a spike in the number of people who are delinquent on their mortgages. The top 10 states where this is happening are in the South and the Midwest.
“This financial strain can deter many from entering the housing market, ultimately affecting their ability to achieve homeownership,” said Cotality Principal Economist Archana Pradhan.
Homeowner equity will continue to buffer many from rising costs. But that’s if they already own a home. Affordable and available homes will continue to be in short supply. Costs will continue to rise. For both buyers and sellers, 2026 won’t be a year of dramatic change. Instead, it will be a slow recovery that steadily mends the property market.
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