Overview
- Year-over-year price growth continues its downward trend, with growth slowing to just 0.5% in February 2026.
- In contrast, 13 states are now recording negative home price appreciation in February 2026 with Washington, D.C. and South Dakota topping the list with 3% year-over-year decline
- 70% of the nation's top 100 metropolitan areas are still classified as overvalued, improvement from 83% at this time last year.
National home price growth
February 2026 data
Source: Cotality
Affordability meter
Source: Cotality
Insights from Chief Economist Dr. Selma Hepp
Heading into the spring homebuying season, annual price appreciation slowed to a marginal 0.5% in February. This signals that the U.S. housing market has finally collided with an affordability ceiling. While this price growth indicates a market at a standstill, it hides a massive internal rebalancing as different regions and property types move in opposite directions.
The current resilience of the Midwest and Northeast—led by states like New Jersey (+5.93%) and Illinois (+4.83%)—has provided a vital buffer for the national index. These regions remain the current leaders in stability, supported by relative affordability and employment in higher wage sectors.
Meanwhile, slowing persists in Washington D.C. (-3.01%), Florida (-2.30%), and Montana (-1.52%), the three states with the highest negative year-over-year changes.
The current housing market is defined by a sharp divide in performance, both nationally and within specific regions. Areas like Cape Coral, FL, and Austin, TX, are regaining price momentum after a sluggish 2025. Conversely, previous high-growth markets like Allentown, PA, and Albany, NY, are now starting to show signs of cooling.
“These diverse trends indicate an ongoing process of price discovery—one where sales and comparisons remain limited—and underscore a market that is rebalancing locally rather than correcting nationally,” notes Cotality Chief Economist Dr. Selma Hepp.
Perhaps the most surprising insight is the emergence of the undervalued giants. For years, cities like San Francisco, San Jose, and Los Angeles were synonymous with extreme overvaluation. Today, after a necessary period of price correction, these markets have officially slipped into undervalued territory.
This shift is happening just as the AI boom begins to create massive regional job growth and wealth. While these high-cost coastal metros are currently recording flat or slightly negative year-over-year growth, they are forecasted to be the nation’s primary growth engines by 2027.
"Although the steady decrease in mortgage rates prior to the spring homebuying season raised hopes for a rebound in home prices and sales in 2026, the recent surge in rates has reduced demand in the housing market, shifting expectations for a broader recovery this year," says Hepp.
The current appreciation in the Midwest is a reflection of a market seeking safety in affordability. However, as the AI boom begins to translate into local hiring and infrastructure, the focus will shift to markets with better performing employment growth and continued in-migration.
-Dr. Selma Hepp
Cotality’s Chief Economist
Top 10 hottest markets
Source: Cotality
Top 10 coolest markets
Source: Cotality
Which areas are affordable?
Tracking the top 5 highest and lowest U.S. median sales prices
Source: Cotality
Markets to watch
Tracking markets with a very high risk of price decline in the top 100 CBSAs
Source: Cotality
High-risk market home price trends
Source: Cotality
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