US home price insights — August 2026

Insights from Chief Economist Dr. Selma Hepp

The U.S. housing market is no longer moving in one direction. Cotality’s June HPI shows a clear geographic rebalancing: inventory-constrained Midwest and Northeast markets are still seeing firm price growth, while many former boom markets in the South and West are adjusting to more supply, weaker affordability, and greater buyer leverage.

The most important signal is the inflection beneath the headline. In the top-100 metros, nearly two-thirds of markets improved their year-over-year trend from May to June, and nine in ten had positive three-month momentum. However, this does not mean the slowdown has ended; it means the market is becoming more localized, with recent price stabilization appearing before annual growth turns positive.  

This is especially visible in Florida and Texas. Cape Coral-Fort Myers, North Port-Bradenton-Sarasota, Jacksonville, Houston, and Tampa still show soft annual readings, but their recent momentum suggests price declines are becoming less broad-based.  

In contrast, Rochester, Austin, Dallas, Everett, and Tucson are showing signs of ongoing weakness after experiencing some relatively strong home price gains over the past year in certain areas, along with an accumulation of for-sale inventory in others. Rochester stands out as a market where the strong price momentum in 2025 eroded affordability and cooled buyer demand for homes.

As a result, the recent robust gains in the Northeast have resulted in a noticeable shift in risk: while overheated Southern cities previously dominated overvaluation concerns, those high-risk indicators have now moved sharply into the Northeast.

In states like Connecticut, New Jersey, and Pennsylvania, a severe shortage of available homes combined with steady buyer demand pushed home prices up quickly, placing heavy strain on buyer budgets and creating concerns if labor market and wage growth lose steam.  

“June data shows a market that is rebalancing, but not uniformly," said Dr. Selma Hepp, Chief Economist at Cotality. "While the Midwest and Northeast continue to lead price growth, rising for-sale inventory is finally helping to release some of the pressure on those markets. In contrast, the rapid inventory buildup in parts of the South and West has slowed price growth and helped stabilize the price declines seen over the last year. After solid spring and early-summer price momentum despite higher mortgage rates, that strength is likely to fade as inflation pressures, labor market weakness, and elevated borrowing costs weigh on prospective homebuyers.”

The Northeast continues to show resilience due to a significant shortage of new construction and a limited number of homes for sale, which are putting upward pressure on prices. With buyers competing for a small selection of available houses, cities such as Bridgeport, Connecticut (+7.5% year-over-year) and Norwich, Connecticut (+9.8% year-over-year) have seen rapid price increases that are impacting local buying power.

At the same time, major technology investments are creating performance differences between individual cities. A clear example of this is Abilene, Texas, where home prices surged 9.5% year-over-year, including a 2.1% jump over just the last three months.

Abilene's price surge is tied to massive investments in local tech infrastructure, specifically the construction of major AI projects like the multibillion-dollar Stargate AI facility. The influx of construction crews, tech engineers, and permanent site operators created an immediate wave of housing demand. Combined with an accessible median home price near $264,600, this tech-driven job boom protected Abilene from the broader housing slowdown seen throughout the rest of Texas.

In contrast, Napa, California, illustrates how elevated home prices and mortgage rates can slow luxury and second-home markets when demand is already soft. Local labor market concerns tied to a correction in the wine industry—driven by weaker post-pandemic domestic demand, high inflation, and tighter credit—have been weighing on buyers, while rising post-wildfire insurance costs are adding pressure for existing homeowners.  

As a result, Napa’s home price index fell 5.0% year over year, including a 2.7% decline over the past three months. In contrast, nearby San Francisco rose 7.5%, supported by AI-driven wealth, a boost Napa has not shared.

"As long as mortgage rates stay consistently high, factors such as local job and income growth, migration patterns, and specific industrial investments will influence the real estate market,” Hepp concludes. “Cities like Abilene demonstrate that even in a cooling state like Texas, targeted capital projects can generate localized demand shocks that completely contradict regional trends."

-Dr. Selma Hepp   

Cotality’s Chief Economist   

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