Overview:
- National home price growth remained modest in July, rising 1.4% year over year.
- The Midwest and Northeast continued to lead appreciation, topped by Connecticut and Illinois (both 6.8%), Indiana (5.3%), New Jersey (5.0%), and Nebraska (4.9%).
- Annual price declines were concentrated in Texas (-0.8%) and parts of the West, including Colorado (-0.7%), Washington (-0.4%), and Hawaii (-0.2%)
National home price growth
July 2026 data
Source: Cotality
Affordability meter
Source: Cotality
Insights from Chief Economist Dr. Selma Hepp
The rise in mortgage rates—from about 6% this spring to more than 6.6% since June—cooled home prices in July. Annual appreciation edged up slightly to 1.4% from 1.3% in June, but prices were essentially flat for the month. That slowdown contrasts sharply with the typical pre-pandemic June-to-July gain of 0.4%.
Cooling is also spreading across more metro areas. Among the 100 largest markets, 19 posted negative three-month price momentum in July, up from 10 in June. Monthly price declines were also more widespread, affecting 46 metros compared with 28 the prior month.
The recent rate hike remains the primary factor slowing the housing market. It reinforces a lock-in effect across mature housing markets that has kept resale inventory relatively flat over the past year. Still, select markets experiencing sharper price slowdowns have seen stronger growth in active inventory. At the same time, higher property taxes and rising insurance premiums are compounding these mortgage-driven affordability pressures.
Beneath the headline numbers, momentum is shifting meaningfully. Several high-cost coastal markets that previously posted strong yearly gains are now showing near-term weakness. San Francisco, for example, was up 7.0% year over year, but prices fell 2.6% over the past three months and 1.4% month over month—the steepest declines among the top 100 metros. This suggests elevated prices, buyer fatigue, and uncertainty around AI-fueled wealth gains are weighing heavily on higher-priced markets.
Downside signals, however, are not uniform. Philadelphia posted the sharpest drop in annual momentum among top markets, falling 2.3 percentage points from June alongside a 0.67% three-month decline. Boise followed with a 1.8-point slowdown and a 0.65% three-month drop. Even so, the largest three-month declines remain concentrated in the West, including San Jose, CA; Austin, TX; Bakersfield, CA; and Everett, WA.
"While prospective buyers may feel squeezed by volatile mortgage rates, slower home price appreciation should gradually help ease affordability pressures—especially if wage growth remains consistently stronger," said Dr. Selma Hepp, Cotality’s Chief Economist.
Regionally, the Northeast and Midwest continue to lead the nation in home price appreciation, driven by year-over-year gains in Connecticut and Illinois (both 6.8%), Indiana (5.3%), New Jersey (5.0%), and Nebraska (4.9%). In these states, years of limited housing starts and low active listings have kept available supply exceptionally tight.
Conversely, Sun Belt and Western states are seeing annual gains weaken—most notably in Texas (-0.8%), Colorado (-0.7%), Washington (-0.4%), and Hawaii (-0.2%), while prices remain essentially flat in Nevada (0.2%) and Florida (0.8%). In Texas and Florida, a wave of newly completed homes combined with rising holding costs—particularly insurance premiums and property tax reassessments—has expanded inventory and shifted negotiating power toward buyers.
Regional outliers highlight how local economic drivers reshape values. Abilene, TX, continues to lead the nation with a 13.3% year-over-year increase supported by local AI-related investment. Other relatively affordable mid-tier markets posting strong annual gains include Helena, MT (10.4%), Manhattan, KS (9.5%), Grand Forks, ND (9.3%), and Terre Haute, IN (9.3%).
At the opposite end of the spectrum, Napa, CA, illustrates the impact of climate risks, with prices dropping 4.3% year over year and 2.1% over three months. Soaring insurance costs, persistent wildfire risk, and softer second-home demand have chilled transaction activity across wine country. Similar year-over-year softening is evident in storm-impacted markets such as Kahului-Wailuku, HI (-7.2%) and regional manufacturing hubs like Dalton, GA (-7.6%).
"As we move through the remainder of the year, local labor market dynamics and affordability constraints will continue to shape housing market performance as much as broader macroeconomic shifts, especially the direction of mortgage rates," added Dr. Hepp.
-Dr. Selma Hepp
Cotality’s Chief Economist
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