Overview:
- Home prices continue to rise nationally, up 1.7%, but momentum is moderating with a 0.3% monthly decline, and annual growth forecasted to slow to 0.9%.
- Compared with August, appreciation strengthened in about half of metros and weakened in the other half, suggesting no single national trajectory.
- Annual appreciation was led by northeastern and Great Lakes states, paced by Illinois (6.9%), Rhode Island (6.4%), Connecticut (6.0%), New Jersey (5.1%), and Ohio (4.9%).
National home price growth
September 2026 data
Source: Cotality
Affordability meter
Source: Cotality
Insights from Chief Economist Dr. Selma Hepp
As autumn arrived, the U.S. housing market cooled further. In September 2026, single-family home prices rose just 1.7% year-over-year and dropped 0.3% from August, pushing the national median above $400,000. This was the largest monthly decline since 2022 and the third consecutive September without growth, as high mortgage rates curbed summer demand. Normally, home prices edge up about 0.2% in September.
But national averages still hide a key divide: Every Northeast and Midwest state saw annual price gains, while four Western and two Southern states posted declines. The market is nearly evenly split between areas accelerating and those slowing. Many Northeastern and Midwestern markets have gained 25% to 30% since mid-2022, while much of the West and Texas have seen little or no net growth.
This regional divide sharpened considerably heading into the final stretch of the year. Chronic inventory shortages in the Great Lakes and New England fueled strong annual gains— Illinois (6.9%), Rhode Island (6.4%), Connecticut (6.0%), New Jersey (5.1%), and Ohio (4.9%). Meanwhile, prices dropped in former boom states: Washington (-1.0%), Wyoming (-0.7%), Texas (-0.4%), Hawaii (-0.1%), and Utah (-0.0%). Since June 2022, Rhode Island, Connecticut, and New Jersey have surged 30–31%, while Washington, Colorado, and Texas are up less than 1%, and D.C. is down 2%.
“Potential homebuyers are feeling the pinch from rising costs across the board, especially for daily living expenses,” said Cotality Chief Economist Dr. Selma Hepp. “Meanwhile, limited job opportunities and slow wage growth are making households reluctant to move.”
Leading metros for recent price growth include Cleveland, Albany, Providence, Greensboro, and St. Louis—places marked by affordability, job growth, in-migration, and recent price resets. In contrast, the fastest-cooling markets, like Augusta, Austin, Seattle, San Jose, and Washington, DC, have seen job losses, higher inventory, and declining affordability.
Rising mortgage rates have sharply reduced affordability. When the 30-year fixed rate rose from 6.5% to 7.5%, the monthly payment on a median-priced home jumped $300, pushing the required annual income to $103,000. In California, buyers need $180,900 for a $754,500 median home. In Florida and Texas ($369,750 median), higher insurance and taxes often push total costs above borrowing limits, fueling declines in metros like Austin (-2.0%) and Dallas (-1.0%).
“Elevated mortgage rates are expected to limit home buying opportunities in 2027,” concluded Dr. Hepp. “However, more inventory and greater buyer bargaining power will keep home price growth subdued, improving affordability. Market activity will favor regions with solid economic prospects, regions that attract retiring population and offer affordable homes.”
-Dr. Selma Hepp
Cotality’s Chief Economist
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Source: Cotality
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