The U.S. housing market is showing early signs of stabilization heading into 2026, according to the latest Home Price Index data released by property analytics firm Cotality. National home price growth slowed to just 1% year-over-year last November, extending a trend of deceleration in price gains that has characterized the market through 2025.
Cotality’s report highlights a mixed regional landscape as the broader housing market finds a new equilibrium. While major metro areas in the Northeast and Midwest, including Newark, Chicago, and Milwaukee, experienced gains in annual price growth, markets in Florida and Texas were among those leading the nation in annual depreciation.
"Looking ahead to 2026, regional differences will remain pronounced, with demand favoring areas that offer both economic opportunity and relative affordability," said Dr. Selma Hepp, Cotality’s chief economist.
Dr. Hepp also noted that anticipated declines in mortgage rates could be a catalyst for renewed market momentum in 2026. Should rates fall as expected, a seasonal upswing in the spring buying season may attract buyers who have remained sidelined during the recent period of constrained affordability and high borrowing costs. Competitive conditions could emerge in inventory-limited markets, particularly in desirable metropolitan areas where demand remains strong.
Despite slowing price growth, Cotality expects the market to remain relatively balanced next year, with home price gains likely to settle toward the lower end of the long-term historical average of 4%–Home Proces Cooling5%. Cotality’s report suggests that increased inventory and improved affordability — driven in part by easing finance costs — will help engage more buyers.
The report underscores that inventory levels and mortgage rate trends will be pivotal in shaping housing activity. A substantial drop in rates could unlock pent-up demand among prospective buyers, many of whom postponed purchases due to the elevated cost of financing. Yet, supply constraints in certain regions may continue to challenge affordability, particularly in high-demand locales.
Local variations are expected to persist in 2026, with affordability and job opportunities influencing buyer decisions. Cotality’s analysis points to a housing market in transition, where adaptability and local market insight will be crucial for both buyers and sellers.
