Home price appreciation slipped into negative territory in February, as affordability pressures and uneven regional performance weighed on housing markets. The latest Home Data Index (HDI) report from Clear Capital found national home prices declined 0.5% quarter-over-quarter, though prices were still up 1.7% year-over-year. This suggests the housing market continues to stabilize after several years of rapid pandemic-era growth.
Regional performance varied widely. The Northeast posted the strongest results, with home prices flat on a quarterly basis but up 4.9% annually. The Midwest followed, with prices down 0.8% quarterly but up 4% year-over-year. The South and West both recorded quarterly declines and weaker annual gains.
Among major metro areas, the report showed a mixed landscape. Of the 15 largest metropolitan statistical areas analyzed, 10 recorded positive quarterly growth while five posted declines.
Northeast Leads Major Markets
Several Northeastern metros led the nation in price growth. The strongest regional metro was Providence, where home prices increased 1.8% quarter-over-quarter and 5.1% annually.
Hartford also ranked among the top performers, with prices rising 1.1% quarterly and 6.2% annually.
In New York City, prices increased 0.4% quarter-over-quarter and 5.1% annually, while Philadelphia posted similar quarterly gains of 0.4% and annual growth of 4.1%.
Midwest Shows Moderate Growth
The Midwest recorded the second-strongest regional performance despite quarterly price declines. Chicago led the region, with prices down 0.1% quarter-over-quarter but up 5.2% annually.
Cincinnati ranked among the region’s weaker markets, with prices declining 1.2% quarter over quarter, though still posting 3.3% annual growth.
Southern Markets Mixed
In the South, prices declined 0.6% quarter-over-quarter and were essentially flat year-over-year. This reflects cooling demand in several once-hot Sun Belt markets.
Richmond emerged as the region’s strongest metro, with prices rising 0.9% quarterly and 3.2% annually.
Birmingham also posted gains of 0.6% quarter-over-quarter and 2.4% year-over-year.
However, several large markets weakened. Raleigh saw prices fall 1.7% quarterly and 2.2% annually, while Nashville also ranked among the laggards.
West Continues To Struggle
The West posted the weakest regional performance, with home prices declining 0.7% quarter-over-quarter and 0.3% annually.
Among Western metros, Fresno recorded 0.6% quarterly growth and 2.4% annual growth, while Bakersfield saw prices rise 0.7% quarterly and 1.6% annually.
Several high-cost markets struggled. Seattle posted one of the steepest declines, with prices down 1.7% quarterly and 1.2% annually.
Denver also weakened, with prices falling 1.5% quarter-over-quarter and 3.1% year-over-year, while San Jose saw prices decline 1.3% quarterly.
Credit Conditions And Investor Activity
Beyond housing fundamentals, the report also highlighted potential risks from broader financial markets.
Rising operating costs — including insurance, maintenance, and property taxes — are also weighing on real estate investors, particularly in the rental market. At the same time, declining asking rents in some markets are compressing expected returns on investment properties.
While the Non-QM sector has expanded in recent years, it remains a relatively small portion of the overall market. Approximately $218 billion in Non-QM mortgages are currently outstanding, compared with about $9.5 trillion in subprime mortgages at the height of the housing boom before 2008, according to the report.
Rate Cuts Could Support Housing Activity
Looking ahead, the report suggests that any tightening in credit conditions could increase pressure on the Federal Reserve to begin lowering interest rates. Lower borrowing costs could help ease the mortgage “rate lock-in” effect, where homeowners hesitate to sell because they hold mortgages with significantly lower rates than those currently available.
If mortgage rates fall, the report suggests it could boost both existing home sales and new construction, potentially supporting housing market activity during the 2026 spring selling season.
