A “two-speed” housing market set the tone for the spring buying season
The US housing market entered 2026 with the weakest price growth in more than a decade, yet with enough regional heat to give mortgage professionals a cautiously busy spring.
Cotality’s latest Home Price Index showed US single‑family home prices up just 0.74% year over year in January 2026, down sharply from the 3.43% pace seen at the start of 2025. Month over month, prices slipped 0.1%.
The firm projected annual gains to re‑accelerate to about 4.4% by January 2027, suggesting a slow climb back toward long‑run norms.
Regional gaps defined the market. The Midwest posted average annual growth of 3.56%, led by Illinois (4.91%), Wisconsin (4.78%) and Nebraska (4.75%).
In the Northeast, New Jersey (5.6%) and Connecticut (5.26%) outpaced the national trend, with Newark and Hartford recording annual gains of 6.73% and 6.27% respectively.
By contrast, parts of the West and South slipped into negative territory, including Florida (‑2.36%), Colorado (‑1.31%), Hawaii and Utah (‑1.11%) and Texas (‑1.09%).
“The current data reveals a ‘two-speed’ housing market; while high-cost coastal and sunbelt regions are undergoing price corrections, the Midwest and Northeast are proving remarkably resilient due to their relative affordability and stable employment bases,” said Cotality chief economist Dr. Selma Hepp.
“Ultimately, locations with consistent job growth will remain the primary engines for price appreciation, but they also have larger inventory deficits, which are driving pressure on home prices.”
Cotality also classified 69 of the 100 largest metros as overvalued, meaning current price indexes sat more than 10% above long‑term estimates. Its Market Risk Indicators pointed to a cluster of Florida metros – from Cape Coral–Fort Myers to West Palm Beach–Boca Raton–Delray Beach – as most at risk of price declines over the next 12 months.
The S&P Cotality Case‑Shiller Index showed national appreciation of just 1.3% in 2025, the slowest since 2011, even as Midwest and Northeast hubs continued to outperform Sunbelt markets that surged during the pandemic years.
Spring 2026 demand is likely to concentrate in relatively affordable, jobs‑rich metros, while overvalued and hurricane‑exposed markets, particularly in Florida, require tighter credit discipline and more conservative expectations on future price gains.
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