U.S. home price growth has slowed sharply to start 2026, with the latest data showing a market that has moved from cooling to near standstill.
Annual home price growth came in at 0.9% in January, down from late 2025 levels, before slowing further to just 0.5% in February, according to the latest data from Cotality.
The trajectory confirms a clear trend: price appreciation is decelerating month by month, with no broad rebound yet taking hold.
From Slowdown To Stall
The market didn’t suddenly weaken — it gradually lost momentum.
- December 2025: ~0.9% annual growth
- January 2026: 0.9% (flat to down trend continues)
- February 2026: 0.5%
At the same time, prices are now slipping month to month:
- -0.11% in January
- -0.16% in February
That combination — slowing annual growth and negative monthly prints — signals a market that is no longer just cooling, but effectively flatlining in the near term.
A Market Defined By A Buyer-Seller Standoff
Cotality economists point to a core dynamic driving the slowdown: buyers and sellers remain far apart on price expectations.
“We are in a period of low sales and price growth … ”
Sellers continue to hold onto pandemic-era equity, while affordability constraints — driven largely by mortgage rates — are keeping buyers on the sidelines.
The result:
- Low transaction volume
- Rising inventory
- Minimal price movement
- Regional splits are getting sharper
While national growth is slowing, the market is not moving uniformly.
- New Jersey (+5.9%) and Illinois (+4.8%) are among the strongest-performing states
- New York (+4.9%) and Chicago (+4.6%) lead major metros
- Meanwhile, Florida, Washington, D.C., and Western markets are seeing outright declines
About 70% of the top 100 metros remain overvalued, though that’s an improvement from last year — another sign the market is slowly rebalancing rather than correcting sharply.
Pressure Is Building At The Top Of The Market
The slowdown is also showing up unevenly across price tiers:
- Lower-priced homes: -0.05%
- High-end homes: -0.25%
That suggests affordability-sensitive buyers are still active, while luxury demand is weakening faster.
The latest February data reinforces a key shift: rate volatility is directly impacting demand.
Earlier expectations for a stronger 2026 rebound have now been tempered, with the market instead entering a slow, uneven rebalancing phase.
The Bottom Line For LOs
This isn’t a downturn. It’s a stall.
- Appreciation is no longer doing the work for you
- Deals are more rate- and payment-sensitive than ever
- Local market knowledge now matters more than national trends
In a market where prices are barely moving, and buyers are hesitant, execution, positioning, and borrower strategy — not momentum — will drive volume.
