Slower price growth offered little relief as buyers stayed sidelined
United States home prices finally cooled in 2025, but the pressure on borrowers barely eased.
New figures from Cotality’s October Home Price Index showed annual growth slowing to just 1.1%, the weakest pace since early 2012, even as many would‑be buyers remained shut out of the market.
Price declines spread across the map, with drops recorded in 32 of the 100 largest metros by October, up from only six at the start of the year.
Cotality pointed to some of the sharpest slowdowns in Miami and St. Petersburg, Florida; Rochester, New York; Las Vegas, Nevada; Seattle, Washington; and Dallas, Texas, all down six percentage points or more in annual growth.
“Slowing price growth reflects a much‑needed rebalancing after years of unsustainable gains,” Cotality chief economist Selma Hepp said.
“While some markets are experiencing declines, these adjustments will help restore affordability over time and make housing more accessible to a wider group of buyers.”
Yet the company’s own data suggests that relief has been uneven at best.
Cotality estimated that affordability pressures contributed to a 15% slowdown in out‑of‑state migration over the past five years, as households opted to stay put rather than stretch for a purchase.
Regional gaps in affordability remained stark. Cotality highlighted smaller markets such as Johnstown, Pennsylvania; Elmira, New York; Joplin, Missouri; Decatur, Illinois; and Weirton, West Virginia as among the most accessible to buyers, even as much of the Sun Belt and Mountain West cooled from the breakneck gains of 2022.
Higher mortgage rates earlier in the year, together with a buildup of both new and existing inventory, have weighed on prices.
The National Association of Realtors recently reported that its national affordability index ticked above 100, meaning a typical family earned more than the income needed for a median‑priced home, but the West still posted an index of just 75.
Brokers and lenders have been preparing for a long grind rather than a quick reset.
First American chief economist Mark Fleming said “household income is expected to rise faster than house prices next year,” a shift he argued would gradually improve house‑buying power even if rates only drift lower.
“This is a key driver of the roughly 3% improvement in affordability we expect between the end of this year and end of 2026, which would return affordability to levels not seen since the summer of 2022,” he said.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
